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realistic it was to expect Ballard Marine to earn such revenue.
Ballard Marine hired Schintzius, a yacht broker, who advised on
the operating characteristics of the yacht, its acceptability as
a charter boat, and its residual value. Schintzius, however, did
not advise petitioner on the day-to-day operations or economics
of a yacht chartering business. Before organizing Ballard
Marine, from late 1985 to 1986, petitioner visited numerous boat
shows. At those boat shows, vendors described yacht investment
plans. We do not doubt that, before forming Ballard Marine,
petitioner considered that he might reduce, or even recoup, his
cost in purchasing a yacht by holding it out for charter. He
knew that there was at least some market for yacht charters.
Indeed, he had arranged entertainment for clients of the firm on
chartered yachts. We are unconvinced, however, that petitioner’s
objective in causing Ballard Marine to purchase and operate the
yacht was to earn a profit. Did petitioner contemplate the
possibility of earning a profit? Yes, we believe that he did, at
least in the sense that a profit was possible if (and that is a
big if) the value of the yacht would decrease at a rate lower
than the rate at which its cost could be recouped out of charter
revenues. Although petitioner may have been an expert in certain
aspects of commercial transactions that accomplished just that,
the insight at the core of both those commercial transactions and
petitioner’s hopes with regard to the yacht seems to us quite
commonplace. We do not equate an objective to make a profit with
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