Petitioners failed to conduct any meaningful investigations
of the fishing boat venture, and they relied on their accountant.
That reliance is not reasonable under circumstances where the
accountant has not been shown to have had any expertise.
Petitioners had loss experiences with the chartering of their
sailboat, and they did not attempt to determine if the same
problems could occur with chartering the fishing boat. Their
lack of action and lack of interest regarding the operation of
the fishing boat charter reflect that their motivation was
primarily tax benefits. Further inquiry might have given
petitioners insight into the likelihood of many of the problems
that they encountered. See Thomas v. Commissioner, 84 T.C. 1244,
1278 (1985), affd. 792 F.2d 1256 (4th Cir. 1986).
Based on the entire record, we are not convinced that
petitioners' primary objective was to make a profit. See Snyder
v. United States, 674 F.2d 1359, 1362-1364 (10th Cir. 1982).
Petitioners did not have an actual and honest objective of making
an economic profit independent of tax savings. We hold that
petitioners' fishing boat chartering activity was not engaged in
for profit within the meaning of section 183(c).
IV. Tahoe Rental Activity6
Petitioners acquired a residence in Tahoe by paying $11,000
in mortgage payment arrears and by accepting responsibility for
6 If we find that petitioners' residential rental activity
was engaged in for profit, then petitioners concede that the loss
limitation rules under sec. 280A(e) apply.
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