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Respondent increased petitioner’s gross income by the amount
of petitioner’s farm expenses in each of the years at issue in a
deficiency notice dated June 25, 2004 (the deficiency notice).
Respondent determined that petitioner did not conduct the farming
activity with the intent to earn a profit under section 183(a).
Respondent also determined that petitioner’s various undertakings
on the family farm were not one activity for purposes of the
section 183 analysis. Finally, respondent determined that
petitioners were liable for the accuracy-related penalty because
petitioners’ underpayments of taxes were due to negligence or
disregard of rules or regulations. Petitioners timely filed a
petition seeking a redetermination of respondent’s determinations
in the deficiency notice.
OPINION
This is the third time that we have been asked to decide
whether petitioner conducted the farming activity for profit. We
held petitioner did not conduct the farming activity for profit
in 1992 and 1993. Mitchell v. Commissioner, T.C. Summary Opinion
1998-200. We similarly held that petitioner did not conduct the
farming activity for profit in 1995, 1996, and 1997. Mitchell v.
Commissioner, T.C. Memo. 2001-269.
A. Section 183 Generally
Section 183(a) provides generally that if an individual
engages in an activity and “if such activity is not engaged in
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