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C. Applying Factors to Facts
Nearly all of the factors in this case indicate that
petitioners did not engage in their lemon farming activity for
profit.
Petitioners did not conduct their activity in a businesslike
manner. Engdahl v. Commissioner, 72 T.C. 659, 666-667 (1979);
sec. 1.183-2(b)(1), Income Tax Regs. For example, they did not
have a written business plan, any financial statements, or any
financial data pertaining to their lemon farming activity other
than a stack of receipts. This dearth of financial records is in
stark contrast to their financial records for their abusive
trusts. Petitioners had copious records for the trusts including
transaction reports by category, balance sheets, and capital gain
reports. Moreover, petitioners were unable to articulate how
they intended to earn a profit, and it is unclear from the record
how many trees they had on the property at any given time.
Petitioners also claim that they attempted changes to their lemon
farming activity when they experienced a water shortage. While
they introduced evidence that they drilled additional wells,
petitioners did not indicate any other methods they attempted to
supply water to their land.
Petitioners also have not shown that they studied the
accepted business, economic, and scientific practices involved in
lemon farming. See sec. 1.183-2(b)(2), Income Tax Regs. While
Mr. Bangs likely had some general farming experience from his
youth and he consulted an adviser regarding which crop to raise,
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