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The Court observed that Rance’s interest in the activity
focused upon the cutting horses and he was otherwise unfamiliar
with and could not identify many of the items claimed on the
Schedules F. There were only minimal amounts of revenue in any
of the years at issue, and the losses were unabated and
substantial. The size of the tax losses in relation to the
revenue from the activity, combined with Rance’s hobbylike
involvement in the activity, made the situation one that has been
described as “too good to be true” and can readily be construed
as a hobby as opposed to an activity where profit was intended.
Dodge v. Commissioner, T.C. Memo. 1998-89, affd. without
published opinion 188 F.3d 507 (6th Cir. 1999); sec. 1.6662-
3(b)(1)(ii), Income Tax Regs. We also note that Rance was
advised by Mr. Kramer that he needed more revenue to avoid hobby
loss characterization.
Rance’s principal argument on this issue is that he relied
on his tax professional. This Schedule F situation is unlike the
noncash charitable contribution where petitioners complied with
their tax professionals’ requests and the failures to properly
comply with the procedural requirements were the fault of the tax
professionals. Rance was engaged in the activity, and he is a
sophisticated and successful business professional. Rance was
aware of his activities, losses, etc., and his tax professional
merely prepared the returns (Schedules F) from the financial
information that Rance provided. The reliance argument is not
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