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to operate the bookstore. At the same time, petitioner
claims to have discovered various defects in the Cloudia,
described above, that necessitated substantial repairs
in order to make the vessel seaworthy. Petitioner's brief
describes his objective as follows:
Subsequently, upon the failure of this [book-
store] venture, and the discovery of the defects
in the vessel's condition, he [petitioner]
decided to overhaul the vessel, and rent it as
he could (and he has rented it, albeit nominally
as of 1990), until such time is [sic] it became
seaworthy enough to sell at a price that would
maximize the recovery on his investment.
In 1987, after owning the vessel for 2 years, petitioner
permitted an individual who had worked on the vessel to
stay on it in return for rent and claims to have thus
placed the vessel in service as a rental activity. From
1987 through 1990, petitioner claims to have realized a
total of $3,305 in rental income from permitting various
friends and acquaintances to stay aboard the Cloudia.
During the same period, petitioner claims to have incurred
cash expenses of $33,751 and depreciation of $84,398, or
total expenses of $118,149, attributable to this activity.
After considering the record in this case, we find
that petitioner has failed to prove that he engaged in
his activity with respect to the Cloudia with the
requisite profit objective. We base our decision
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