any, that are earned. A record of substantial losses over many
years and the unlikelihood of achieving a profitable operation
may be important factors bearing on the taxpayer's intention.
Cannon v. Commissioner, 949 F.2d 345, 352 (10th Cir. 1991), affg.
T.C. Memo. 1990-148; Golanty v. Commissioner, 72 T.C. at 426-427.
Petitioners' chartering activities generated substantial losses
over a period of about 8 years, which petitioners used to offset
taxable income from other sources.
(8) The financial status of the taxpayer. During the period
petitioners owned and attempted to charter the sailboat, they
received substantial income from their full-time medical
practices. Petitioners' income from the practice of medicine
provided the base from which chartering activities losses were
deducted, providing tax benefits.
(9) The presence of elements of personal pleasure or
recreation. Mr. Hilliard has sailed as a hobby since 1966.
Petitioners used the sailboat personally about one weekend a
month during the summer.
Essentially, petitioners sought to deduct the cost of the
operation of their sailboat, which they had available for their
personal use. Their approach was not businesslike, and little
effort was invested in their attempt to charter the boat. We
note that the year after the fishing boat was purchased and
started the generation of substantial deductions (by way of
depreciation and credits), petitioners ceased any attempt to
charter the sailboat or to claim any operating expenses.
Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Next
Last modified: May 25, 2011