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We next consider the success of the taxpayer in carrying on
other similar or dissimilar activities. Prior to purchasing the
ranch, petitioner said he purchased undeveloped land in San Jose,
California, and developed “the first luxury mobile home park for
senior citizens in the state”. Petitioners owned and operated
the mobile home park for approximately 20 years. Petitioner
stated that petitioners worked 7 days per week and employed one
groundsman. Petitioner further stated that the mobile home park
operated profitably after the first 10 years and that 10 years
thereafter, petitioners sold the mobile home park for $7 million.
The taxpayer’s history of income or losses with respect to
the activity is another factor. At trial, petitioner did not
provide a history of income or losses for his ranch. During the
taxable years in issue, losses exceeded $250,000, an average of
$125,000 for each year. Although petitioner claimed that the
losses since 1997 have lessened, petitioner admitted that the
losses for the years before those in issue would have been
roughly the same as the taxable years in issue. Over this
approximate time frame of 12 years, petitioner incurred losses of
$1,500,000.
The amount of occasional profits, if any, which are earned
is another factor. No profits were earned with respect to the
ranch during the years in issue.
We next consider the financial status of the taxpayer.
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Last modified: May 25, 2011