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LAWYER, CPA, FARMER: THREE-TIME LOSER!

July 07, 2006

Whatever problems Austin Mitchell of Salem, Missouri has, they aren't from lack of persistence. The lawyer-CPA yesterday lost a case involving losses on his farm. That would be unremarkable, except it's the third time he's lost a hobby-farm case involving the same farm.

The case shows that there are limits to hard work as a teenager:

Petitioner argued that his previous work on the family farm as a teenager indicates that he was previously successful in a similar activity. Petitioner did describe in detail how much corn was cropped due to his efforts, but he did not prove that the family farm was financially successful during those years. Accordingly, petitioner's prior work on the family farm does not support a finding for petitioner.

It also shows that credentials alone don't necessarily triumph:

Petitioner is a licensed CPA and has a legal practice. We find that petitioner is hard-working and dedicated to his professional pursuits. Petitioner's success in a CPA and legal practice, however, does not equate with petitioner conducting the farming activity with an honest and actual objective of making a profit.

Of course I'm trying to make money on my farm! I'm a CPA, buddy!

The moral: If you aren't a full-time farmer and you want to deduct farm losses, you'd better have books, records and a business plan to make money. Better yet, just make money.

Links:

Mitchell, T.C. Memo. 2006-145
Mitchell, T.C. Memo. 2001-269

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