Larry G. and Mary L. Bangs - Page 7

                                         -7-                                          
               Respondent audited petitioners’ return for 1995.  In that              
          audit, respondent did not disallow the deductions petitioners               
          claimed in connection with their farming activity for that year.            
               Several natural events occurred during the years at issue              
          that impacted the lemon farming activity.  A 1993 wildfire                  
          destroyed some of the lemon trees.  Poor soil conditions led                
          petitioners to consult a supervising plant pathologist in 1997              
          out of concern for their trees’ health.  The pathologist examined           
          the trees and noted that they looked unhealthy and had curled               
          yellow leaves.  The pathologist reported that these problems                
          could be due to the soil staying wet too long or to a mineral               
          deficiency.  Petitioners also claim they experienced a water                
          shortage during the years at issue.  Petitioners drilled                    
          additional wells in 2000 and 2002, but their efforts did not                
          produce any additional water.  Mr. Bangs indicated at trial that            
          he would await the outcome of this case before he decided whether           
          to drill more wells on the property.                                        
          The Trust Scheme                                                            
               Petitioners became involved in a trust scheme in 1999.                 
          They did not consult an attorney or CPA before they bought into             
          the scheme.  Petitioners transferred title to most of their                 
          assets to trusts to avoid paying taxes on the income from these             
          assets.  Petitioners, in contrast to the lack of records for                
          lemon farming, kept detailed books and records relating to their            
          trusts.  The trust-related financial records included balance               
          sheets, capital gain reports, and transaction reports by                    





Page:  Previous  1  2  3  4  5  6  7  8  9  10  11  12  13  14  15  16  17  18  19  20  Next

Last modified: May 25, 2011