{"id":4144,"date":"2020-11-12T12:01:54","date_gmt":"2020-11-12T19:01:54","guid":{"rendered":"https:\/\/www.tax.newmexico.gov\/tax-professionals\/?p=4144"},"modified":"2026-04-11T13:14:21","modified_gmt":"2026-04-11T19:14:21","slug":"david-m-gonzales","status":"publish","type":"post","link":"https:\/\/www.tax.newmexico.gov\/tax-professionals\/2020\/11\/12\/david-m-gonzales\/","title":{"rendered":"David M. Gonzales"},"content":{"rendered":"<p>[et_pb_section fb_built=&#8221;1&#8243; _builder_version=&#8221;4.6.6&#8243; _module_preset=&#8221;default&#8221;][et_pb_row _builder_version=&#8221;4.6.6&#8243; _module_preset=&#8221;default&#8221;][et_pb_column _builder_version=&#8221;4.6.6&#8243; _module_preset=&#8221;default&#8221; type=&#8221;4_4&#8243;][et_pb_text _builder_version=&#8221;4.6.6&#8243; _module_preset=&#8221;default&#8221; hover_enabled=&#8221;0&#8243; sticky_enabled=&#8221;0&#8243;]<\/p>\n<div class=\"blogDateTitleContainer\">\n<div class=\"blogDateTitle\">09\/09\/2016<\/div>\n<\/div>\n<div class=\"blogItem\">\n<p><a href=\"https:\/\/realfile.tax.newmexico.gov\/16-43_david_gonzales.pdf\">16-43<\/a><\/p>\n<p><span>On November 16, 2015, the Department assessed the Taxpayer for personal income tax, penalty and interest for the tax periods from January 1, 2011 through December 31, 2014.\u00a0 On January 14, 2016, the Taxpayer filed a protest.\u00a0 The Taxpayer is a full-time employee for the New Mexico Department of Transportation, and has been since approximately 1992.\u00a0 Sometime in 2001, the Taxpayer began a cattle operation.\u00a0 Over time, the Taxpayer\u2019s cattle operation went from purchasing some cows to lease to roping and rodeo operators to breeding cattle and selling them for beef.\u00a0 In the process of establishing the breeding operation, the Taxpayer determined what type of cattle would be most desirable for beef cattle, and that it might take up to ten years to breed that type and grow the herd large enough to be profitable.\u00a0 At one point in 2010, the Taxpayer had 110 head of cattle, but had to sell most of them off because of various issues and sometime in 2012 or 2013, the herd was as low as 18 head.\u00a0 The Taxpayer has never made a profit on his cattle operation and categorizes his best years as \u201cbreaking even.\u201d\u00a0 During all the tax years in question, the Taxpayer claimed significant losses on his personal income taxes in relation to his cattle operation.\u00a0 The issue to be decided at hearing is whether the Taxpayer is liable for the assessment.\u00a0 The parties agree that the determination hinges on whether the Taxpayer\u2019s cattle operation should be considered as a for-profit business or not under 26\u00a0<\/span><span>USCS<\/span><span>\u00a0Section 183.\u00a0 The Taxpayer argues that the time and effort required to engage in the cattle business make it a for-profit activity, while the Department argues that the Taxpayer\u2019s conduct was not sufficient to show that the activity was for-profit.\u00a0 There is a federal deduction allowed for expenses occurred when engaging in any trade or business, but this deduction is disallowed when the activity is not for-profit.\u00a0 The federal regulations list nine factors to aid in determining whether an activity is for-profit or not.\u00a0 In examining each of these factors, the Hearing Officer found that some factors weighed against finding that the activity is for-profit, while others weighted for it, but in the end six of the nine factors indicated that the activity engaged in by the Taxpayer was not for-profit and the deductions were correctly disallowed by the Department.\u00a0 The Hearing Officer did find that the Taxpayer reasonably relied on a tax professional, an enrolled agent, who prepared his tax returns and advised him to take the deductions.\u00a0 Due to this, the penalty was ordered to be abated, but the assessed tax and interest were determined to be correct.\u00a0 The Taxpayer\u2019s protest was granted in part and denied in part.<\/span><\/p>\n<\/div>\n<p>[\/et_pb_text][et_pb_text _builder_version=&#8221;4.6.6&#8243; _module_preset=&#8221;default&#8221;]<\/p>\n<p><a href=\"\/all-nm-taxes\/tax-decisions-orders\/\">Back to Tax Decisions &amp; Orders<\/a><\/p>\n<p>[\/et_pb_text][\/et_pb_column][\/et_pb_row][\/et_pb_section]<\/p>\n","protected":false},"excerpt":{"rendered":"<p>09\/09\/2016 16-43 On November 16, 2015, the Department assessed the Taxpayer for personal income tax, penalty and interest for the tax periods from January 1, 2011 through December 31, 2014.\u00a0 On January 14, 2016, the Taxpayer filed a protest.\u00a0 The Taxpayer is a full-time employee for the New Mexico Department of Transportation, and has been [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_et_pb_use_builder":"on","_et_pb_old_content":"","_et_gb_content_width":"960","footnotes":""},"categories":[43],"tags":[],"class_list":["post-4144","post","type-post","status-publish","format-standard","hentry","category-tax-decisions-orders"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.5 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>David M. Gonzales : Tax Professionals<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.tax.newmexico.gov\/tax-professionals\/2020\/11\/12\/david-m-gonzales\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"David M. 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