Ranching activities weren’t engaged in for profit in one situation.
The taxpayer owned a profitable research and publishing business. Through a limited partnership, he acquired a ranch and began running a cattle operation.
The taxpayer kept books for the operation but didn’t have a written business plan, maintain budgets, hire experts or take other steps to become profitable.
He reported substantial losses on his tax return. The IRS disallowed them, claiming that the ranching activities weren’t engaged in for profit under the tax code. The U.S. Tax Court agreed.
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