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Unless stated otherwise, all section references are to the
Internal Revenue Code as amended and in effect during 1990.
After concessions by petitioner, the issues for decision
are: (1) Whether petitioner is entitled to treat a
sailboat as property held for the production of income
and to deduct certain expenditures and depreciation
attributable to the sailboat or whether petitioner's
activity with respect to the sailboat is an "activity not
engaged in for profit", as defined by section 183(c); and
(2) whether petitioner is liable for the accuracy-related
penalty under section 6662(a), as determined by respondent.
FINDINGS OF FACT
Petitioner resided in Oklahoma City, Oklahoma, when
the instant petition was filed. The stipulation of facts
filed by the parties and the exhibits attached thereto are
hereby incorporated in this opinion.
Petitioner is an attorney who specializes in criminal
law. In 1985, he purchased a 63-foot sailboat named
Cloudia for $110,000. The Cloudia is a former Norwegian
fishing vessel that was built in 1934. It was featured
in a motion picture that was originally released with the
title “Sea Gypsy” and was later renamed "The Shipwreck".
At no time after petitioner’s purchase of the Cloudia
in 1985 through the time of trial has the Cloudia been
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