In Uncategorized on 12/13/2021 at 16:18

Judge Joseph Nega regretfully shuts down Vardan Antonyan’s Paradise Acres, as Vardan’s plan never gets nearly operational. Here’s the story: Vardan Antonyan and Margarita Safaryan, 2021 T. C. Memo. 138, filed 12/13/21*.

Vardan wanted to make the desert bloom, so he started with 10 acres “in the middle of the Mojave Desert, approximately 1 mile away from any road and 120 miles away from petitioners’ residence.” 2021 T. C. Memo. 138, at p. 2. Vardan says he wants to subdivide the land into plots, get USDA organic certification, and rent to farmers.

Unlike so many hobby losers and busted starters-up, Vardan had a business plan. This “…first required him to construct a nonlivable outdoor structure, similar to a barn, on the property. The business plan then required him to obtain a certification from the U.S. Department of Agriculture (USDA) certifying that the land complied with the standards set forth for organic farming. Finally, the business plan provided for the installation of an irrigation system on the property and the construction of an access road to the property.” 2021 T. C. Memo. 138, at p. 3.

Vardan did build a water storage tank to catch whatever rainfall one might find in the middle of the Mojave Desert, bought some materials and rented some vehicles, did some building work (but the barn never got done), never got the USDA certification, and never put in the irrigation system.

And Vardan was less than stellar on the stand. “Assuming, arguendo, that none of the steps in petitioner husband’s business plan was necessary to rent the property, petitioners nevertheless failed to produce any evidence to establish that petitioner husband held the property out for rent during [year at issue]. Other than petitioner husband’s incredible testimony, petitioners failed to produce any evidence to establish that petitioner husband was actively managing and engaging with potential customers to rent the property during [year at issue] or that he received any offers from potential customers.” 2021 T. C. Memo.138, at p. 12.

Vardan’s deductions are dried up.

Takeaway- So many start-ups and Section 183s founder for want of a written business plan. But having the plan isn’t enough. My colleague Peter Reilly, CPA, has often said that, while a plan certainly helps,  if it’s not executed it’s nothing.

*Vartan Antonyan 2021 T C Memo 138 12 13 21


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