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188 F.3d 507 (6th Cir. 1999).
“A change of operating methods, adoption of new techniques
or abandonment of unprofitable methods in a manner consistent
with an intent to improve profitability may also indicate a
profit motive.” Sec. 1.183-2(b)(1), Income Tax Regs. Petitioner
contends that he has made efforts to reduce expenses in order to
operate the ranch in a profitable manner. Nothing in the record
indicates what efforts to reduce expenses, if any, were made
during the taxable years in issue. Petitioner never ascertained
how or when he would make a profit or how he could change his
operating methods to improve his profitability. Although
petitioners owned cattle during the years in issue, there were no
sales of cattle during those years. Nor was there any evidence
of an effort to raise cattle for profit on their ranch.
We next consider the expertise of the taxpayer. Since
purchasing the ranch, petitioner has learned about the types of
trees that should be planted in specific areas on the ranch.
Petitioner also claimed that in 1986 he began studying,
researching, and compiling data on the marketing and sale of
verified emission reduction offsets (carbon credits) to polluting
entities, and that he has consulted about that subject with the
Oregon Department of Forestry and a chemistry/biology professor
who holds a Ph.D. Yet, during the years in issue petitioner did
not put any acquired knowledge to use in an endeavor to make a
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