- 10 -
ranchers experience a history of operating losses as money is
spent improving their land but will make a profit when they
eventually sell their ranches. Petitioner stated that the value
of his ranch has appreciated significantly, and he estimated that
the value of his ranch has increased from $150 per acre to
approximately $1,000 to $1,500 per acre.
Without supporting documentation, petitioner’s testimony is
self-serving, and it is well established that this Court is not
bound to accept at face value such unverified testimony from a
taxpayer. See Shea v. Commissioner, 112 T.C. 183, 189 (1999);
Tokarski v. Commissioner, 87 T.C. 74, 77 (1986).
We apply the nine factors provided in the regulations, sec.
1.183-2(b), Income Tax Regs., to the limited evidence petitioner
introduced to prove that he was engaged in his horse activity for
profit.
In the complete absence of books and records, we can only
conclude that petitioner did not engage in his horse activity in
a businesslike manner. Although petitioner claims that he sent
receipts to his accountant twice a year for purposes of
maintaining books and records for his ranch, petitioner did not
introduce these books and records into evidence. In addition,
petitioner did not develop a budget or an informal business plan
to project whether the horse activity could be operated
profitably, did not have a separate bank account for his horse
Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 Next
Last modified: May 25, 2011