Wondries v. Comissioner: Tax Court Holds That Taxpayers Are Entitled to Deductions on Ranching Activity (January 10, 2022)

On January 9, 2023, the U.S. Tax Court held that taxpayers engaged in a ranching activity were doing so for profit and thus they were eligible for tax deductions due to losses incurred during such activity. The taxpayers had engaged in a ranching activity for several years, sustaining a net loss during each one. The IRS disputed the taxpayers claiming tax deductions based on these losses, instead arguing that the ranching activity was not for profit and therefore ineligible to claim tax deductions for business losses. The Tax Court weighed nine factors to determine whether the taxpayers were engaged in a good-faith effort to make a profit and found that six of these factors favored the taxpayers in this case.

See Wondries v. Commissioner of Internal Revenue

Posted by Benjamin Sapozhnikov, Associate Editor, Wealth Strategies Journal.