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Ranch Taxes - Can a Landowner Deduct If They Don't Materially Participate?

We had a friend email us today about an IRS case that was taken to court over a land owner's participation coming into question regarding tax deductions:


Losses not deductible where ranch owners didn't materially participate in ranch activities
The Tax Court disallowed losses incurred in a cattle ranch owned by taxpayers where they failed to provide evidence in support of their claim that they materially participated in the day-to-day management or operation of the ranch. In addition, the taxpayer's services performed in the management of the ranch activity were disregarded because of the presence of a full-time paid ranch manager who ran the day-to-day activities of the ranch. Iverson, TC Memo 2012-19


You can read more about this case here:

What are your thoughts on this?  Do you think it's fair to the land owner?  Give us your comments below....

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