U.S. Tax Court Memorandum Rules in Favor of Taxpayer, Allows Additional Deductions for Farm Expenses (IRC §183)

The U.S. Tax Court ruled in favor of the taxpayer, allowing additional deductions for farm expenses incurred by the taxpayer for the 2016 tax year. The issue was whether IRC §183, which pertains to activities not engaged in for profit, would limit the taxpayer’s ability to deduct an additional $205,514 in farm expenses. Taxpayer, an individual who owned and operated a ranch, claimed deductions for farm expenses that exceeded the income from the ranching activity. The IRS disallowed a portion of the deductions under IRC §183, arguing the ranching was not engaged in for profit. The court analyzed the nine ...