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the operation of the cow activity in a businesslike manner.
Accordingly, this factor is favorable for Zane.
2. Taxpayer’s Expertise--Through study, Zane gained
expertise in the breeding of cows and in the use of Normande cows
for dairy purposes. He sought professional advice and
successfully used in the cow activity his animal husbandry
expertise gained from breeding dogs. Overall, this factor is
favorable for Zane.
3. Time and Effort Spent in Conducting the Activity--Zane
spent an average of 20 to 30 hours per week on his cow and dairy
farm activity. Certainly, 20 to 30 hours per week is
significant. Accordingly, this factor favors Zane.
4. Expectation That the Assets Will Appreciate in Value--
The term “profit” encompasses appreciation in the value of
assets, such as land, used in the activity. Sec. 1.183-2(b)(4),
Income Tax Regs. Respondent contends:
farming and the holding of land with the primary
intent to profit from an increase in its value
will be considered a single activity only if the
farming activity reduces the net cost of carrying
the land for its appreciation in value. That is,
they will be considered a single activity only if
the income derived from farming exceeds the
deductions attributable to the farming activity
which are not directly attributable to the
holding of the land.
Zane has two separate farms, one in Hamilton, New York
(Goose Hill), with approximately 400 acres purchased in 1998 for
$600 to $650 per acre and currently worth around $2,500 per acre
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Last modified: March 27, 2008