Larry G. and Mary L. Bangs - Page 12

                                        -12-                                          
          requests for witnesses, information, documents, meetings, and               
          interviews.  Sec. 7491(a)(2)(A) and (B).6                                   
               We find that petitioners failed to comply with respondent’s            
          reasonable requests.  Id.  Although petitioners produced                    
          documents respondent requested, petitioners refused to answer               
          respondent’s questions about their farming activity.  Respondent            
          was forced to issue petitioners a summons to obtain necessary               
          information to complete the audit.  Accordingly, we find that the           
          burden of proof remains with petitioners.                                   
          II. Whether Petitioners Engaged in Their Lemon Farming Activity             
               for Profit                                                             
               A.   Section 183 Generally                                             
               We now address whether petitioners engaged in their lemon              
          farming activity for profit within the meaning of section 183               
          during the years at issue.  Section 183(a) provides generally               
          that if an individual engages in an activity and “if such                   
          activity is not engaged in for profit, no deduction attributable            
          to such activity shall be allowed under this chapter except as              
          provided in this section.”  Deductions that would be allowable              
          without regard to whether the activity is engaged in for profit             
          are allowed under section 183(b)(1).  Deductions that would be              
          allowable only if the activity were engaged in for profit are               
          allowed under section 183(b)(2), but only to the extent that the            


               6Sec. 7491 is effective with respect to court proceedings              
          arising in connection with examinations by the Commissioner                 
          commencing after July 22, 1998, the date of enactment of the                
          Internal Revenue Service Restructuring and Reform Act of 1998,              
          Pub. L. 105-206, sec. 3001(a), 112 Stat. 726.                               




Page:  Previous  2  3  4  5  6  7  8  9  10  11  12  13  14  15  16  17  18  19  20  21  Next

Last modified: May 25, 2011