- 17 - Petitioner contends that he had the necessary expertise in farming to operate a farm for profit. He was born and raised on the family farm. He had previous experience producing row crops, hay, and livestock. He had conversations with other farmers in the area.5 Additionally, he consulted with two expert advisers, Harris and a sawyer. The record does not show, however, that petitioner knew how or intended to make a profit from his current farming undertakings. He did not seek expert advice on how to operate his farm profitably. He discussed farming with his farmer clients and farmer neighbors, but there is no evidence that they gave him advice about farming for profit. This factor favors respondent. 3. The Taxpayer’s Time and Effort We next consider the time and effort petitioner expended in conducting the farming activity. A taxpayer’s devotion of much time and effort to conducting an activity, particularly if the activity does not have substantial personal or recreational aspects, may indicate an intention to derive a profit. Sec. 1.183-2(b)(3), Income Tax Regs. 5Petitioner also testified that he consulted experts after 2000. Stating the obvious, petitioner could not possibly have carried on the farming activity during 1998 and 2000 in accordance with expertise garnered later. This testimony is therefore irrelevant.Page: Previous 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Next
Last modified: May 25, 2011