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Nor has petitioner attempted to make the farming activity
profitable by changing his conduct over the years. Rather, we
find it remarkable how little petitioner has changed the farming
activity despite years of operating losses. Petitioner primarily
relies on the changes in his arrangement with Harris made in 1999
as demonstrating his attempt to earn a profit. We find that the
change in the pasture land arrangement was just a change in form
but not substance because the amounts of money exchanged offset
each other. We find, however, that the change in the haying
arrangement with Harris in 1999 was substantive because
petitioner received half the hay after the change while before he
received none of the hay. This enabled petitioner to sell hay to
generate revenues, which he did.
We find that this one change does not outweigh the lack of
complete and accurate books and records and the absence of other
indicia that petitioner conducted the farming activity in a
businesslike manner. This factor favors respondent.
2. Expertise of the Taxpayer or His Advisers
We next consider petitioner’s expertise and that of his
advisers. Preparing for an activity by extensive study on one’s
own or by consulting with experts and conducting the activity in
accordance with what has been learned indicates that the taxpayer
had an actual and honest profit objective. Sec. 1.183-2(b)(2),
Income Tax Regs.
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