General K. Hilliard and Ida M. Hilliard - Page 8

          area.  The sailboat was infrequently chartered, and it was not              
          maintained.  Berth fees paid directly to Captain George's were              
          not forwarded to the harbor master.  After 1 year, Mr. Hilliard             
          moved the boat to a marina in Richmond, California, and,                    
          thereafter, petitioners attempted to charter the sailboat                   
          themselves.  Mr. Hilliard had no prior experience in sailboat               
          chartering.  Petitioners posted notices on bulletin boards in the           
          hospitals where they worked, placed a sign on the boat, and                 
          otherwise relied on word of mouth to advertise their sailboat for           
          charter.  The sailboat, while located at the Richmond marina, was           
          seldom chartered.  Petitioners received little income, and it was           
          substantially less than their claimed expenses.  Petitioners                
          ceased sailboat charter activity during 1987, but they retained             
          the sailboat for personal use.  During the time petitioners were            
          attempting to charter the sailboat, they personally used the boat           
          about once a month during the summer.  The boat was not used                
          during the winter.                                                          
               (1) Manner in which the taxpayer carries on the activity.              
          Attempts to publicize or advertise the chartering activities were           
          not significant.  Petitioners did not prepare a written business            
          plan prior to the sailboat purchase.  No separate books and                 
          records or separate bank accounts were maintained regarding the             
          sailboat.                                                                   
               (2) The expertise of the taxpayer or his advisers.  Although           
          Mr. Hilliard was an experienced sailor and sailed the boat during           
          the summer, he had no experience with chartering.  Petitioners              




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