Nickerson v. Commissioner
United States Court of Appeals for the Seventh Circuit
700 F.2d 402 (1983)
Melvin Nickerson (plaintiff), a self-employed advertising professional, bought a long-abandoned dairy farm intending to transition into farming as a new career within about ten years, visiting regularly to gradually renovate the farmhouse, barn, and equipment shed while leasing the unfarmable land to a tenant farmer who also helped prepare it for future cultivation. Nickerson deducted his restoration costs as business expenses, but the Commissioner (defendant) disallowed the deductions, finding profit was not his primary motive; the Tax Court agreed with the Commissioner, and Nickerson appealed.
Whether a taxpayer may deduct current business expenses for a venture, such as farm restoration, when the taxpayer's profit goal is genuine but achievable only over a long-term horizon rather than immediately.