The method described in section 175 is available only to a taxpayer engaged in “the business of farming”. A taxpayer is engaged in the business of farming if he cultivates, operates, or manages a farm for gain or profit, either as owner or tenant. For the purpose of section 175, a taxpayer who receives a rental (either in cash or in kind) which is based upon farm production is engaged in the business of farming. However, a taxpayer who receives a fixed rental (without reference to production) is engaged in the business of farming only if he participates to a material extent in the operation or management of the farm. A taxpayer engaged in forestry or the growing of timber is not thereby engaged in the business of farming. A person cultivating or operating a farm for recreation or pleasure rather than a profit is not engaged in the business of farming. For the purpose of this section, the term farm is used in its ordinary, accepted sense and includes stock, dairy, poultry, fish, fruit, and truck farms, and also plantations, ranches, ranges, and orchards. A fish farm is an area where fish are grown or raised, as opposed to merely caught or harvested; that is, an area where they are artificially fed, protected, cared for, etc. A taxpayer is engaged in “the business of farming” if he is a member of a partnership engaged in the business of farming. See paragraphs (a)(8)(i) and (c)(1)(iv) of § 1.702-1.
[T.D. 6649, 28 FR 3762, Apr. 18, 1963]
Notes of Decisions
Tatum v. Comm'r, 46 T.C. 736 (Tax Ct. 1966).
· cites it 4× “↩ , which defines "the business of farming," provides that "a taxpayer who receives a rental (either in cash or in kind) which is based upon farm production is engaged in the business of farming.”
Strong v. Comm'r, 91 T.C. 627 (Tax Ct. 1988).
· cites it 2× “These actions qualify petitioners as being engaged in the business of farming (see secs.”
In Re Sugar Pine Ranch, 100 B.R. 28 (Bankr. D. Or. 1989).
“Creditors emphasize that the Internal Revenue Service has adopted a definition of “the business of farming” for various purposes involving a determination of taxable income ( 26 CFR § 1.175-3 and 26 CFR § 1.182-2 ). Suffice it to say that: “Declarations made on income tax…”
La Musga v. Comm'r, 45 T.C.M. 422 (Tax Ct. 1982).
· cites it 2× “For instances in which these factors have been applied in determining whether an individual is "engaged in farming" for Federal income tax purposes see Maple Leaf Farms, Inc. v. Commissioner, 64 T.”
Maple v. Comm'r, 27 T.C.M. 944 (Tax Ct. 1968).
· cites it 2× “Respondent contends that in fact Corona assumed no risk of loss of the seedlings, asserting that all of the agreements relating to their purchase were drawn up after the trees were ready to be transplanted to the Steel Valley property.”
Viani v. Comm'r, 68 T.C.M. 776 (Tax Ct. 1994).
· cites it 4× “, provides, inter alia: "A taxpayer is engaged in 'the business of farming' if he is a member of a partnership engaged in the business of farming.”
Cameron v. Comm'r, 43 T.C.M. 1341 (Tax Ct. 1982).
· cites it 14× “Definition of the term "farmer" for purposes of section 1.471-6(a), Income Tax Regs.”
Dudden v. Comm'r, 91 T.C. 642 (Tax Ct. 1988).
· cites it 2× “Moreover, petitioners' employment, managerial positions, and stock ownership qualify petitioners as being engaged in the business of farming (see secs.”
Goodrum v. Vermont Dep't of Taxes, 2014 VT 128 (Vt. 2014).
“” 3 26 C.F.R. §1.175-3 . ¶ 8. The proper interpretation of “gain or profit” is the primary issue in this appeal.”
Ward AG Prods. v. Comm'r, 1998 T.C. Memo. 84 (Tax Ct. 1998).
· cites it 2× “, provides in part: A taxpayer is engaged in the business of farming if he cultivates, operates, or manages a farm for gain or profit, either as owner or tenant.”
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