-6-
have a business plan, a separate bank account, nor any books and
records in which income and expenses were recorded.
Petitioners reported income, expenses, and gain or loss on
Schedule F, Profit or Loss from Farming, to their income tax
returns for 1993 through 2002 as follows:
Year Income Expenses Gain (Loss)
1993 -- $47,687 $(47,687)
1994 $469 63,699 (63,230)
1995 1,343 43,952 (42,609)
1996 1,341 37,484 (36,143)
1997 2,728 39,922 (37,194)
1998 1556 35,278 (34,722)
19992 -- 28,935 (28,935)
20003 -- 37,853 (37,853)
2001 -- 16,591 (16,591)
2002 -- 33,535 (33,535)
1 While the Schedules F for 1995 through 1998 indicate that
petitioners earned some income from farming during these years,
there is no indication that this income was from lemon sales, nor
did petitioners introduce receipts from lemon purchasers as they
did for the 1994 income.
2 The amounts reported here for 1999, 2000, and 2001 are
from petitioners’ pro forma returns, not petitioners’ original
individual income tax returns. Petitioners’ original 1999 return
reported a portion of this loss, and the record reflects that the
remainder of this loss was reported on a trust return. See
infra, pp. 7-8.
3 Petitioners' original returns for 2000 and 2001 did not
reflect any lemon farming activity because petitioners included
it on a trust return for those years. The income, expenses, and
losses for 2000 and 2001 were included on the pro forma returns.
The income petitioners reported in 1994 through 1998 was
insufficient to cover the property taxes.
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