Academic journal article Journal of Accountancy

Ninth Circuit Agrees Farming Activity Is Partnership

Academic journal article Journal of Accountancy

Ninth Circuit Agrees Farming Activity Is Partnership

Article excerpt

The Ninth Circuit agreed with the Tax Court that a father-son farming and logging operation was a partnership for federal income tax purposes and that the father's deduction of the bulk of the activity's expenses on his individual return was not acceptable.

William and Randal Holdner operated a farming activity, Holdner Farms. Randal, the son, conducted the farm's day-to-day physical operations, and William, the father, who was also a practicing accountant, was responsible for sales, purchasing, financing, and accounting. Each party reported one-half of the activity's gross income for tax purposes. However, William Holdner allocated the expenses between himself and his son arbitrarily. Most of the expenses he allocated to himself and deducted on his tax return's Schedule F, Profit or Loss From Farming, claiming a net loss in each of the years at issue, 2004-2006. Although the Holdners did not file a partnership return for Holdner Farms, upon examination of their individual returns, the IRS determined that Holdner Farms was a partnership in which the Holdners held equal ownership interests and that they must allocate the income and expenses from the partnership accordingly. The IRS also assessed an accuracy-related penalty against William Holdner for the years under examination because of the improper deductions of Holdner Farms' expenses. …

Search by... Author
Show... All Results Primary Sources Peer-reviewed

Oops!

An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.