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integrated transactions, and the entire transaction
lacked economic reality.
Additionally, the claimed deductions and losses are
disallowed because of the lack of any profit motive.
Moreover, the claimed deductions and losses are
disallowed because they do not clearly reflect income.
The parties have stipulated that Messrs. Brown and Hemmings are
not entitled to the losses claimed with respect to the Conti
transactions. Since the Conti losses have been disallowed,
Messrs. Brown and Hemmings believe that it is now beneficial to
invoke either of the transitional rule elections. In their
petitions, Messrs. Brown and Hemmings seek to make an election
under ERTA section 509. By amended petitions filed July 7, 1986,
Messrs. Brown and Hemmings purported to supply information
required by ERTA section 509(a). By amendments to the amended
petitions, filed May 31, 1995, Messrs. Brown and Hemmings, in the
alternative, seek to make an election under ERTA section 508(c).
Respondent takes the position that these elections are untimely
and invalid.
Charitable Contribution Deduction
In 1982, Mr. Hemmings owned a 37-foot Italian speedboat (the
boat) that he docked at a yacht club in West Palm Beach, Florida.
A boat broker, referred to only as "Don", maintained an office at
the yacht club. Don approached Mr. Hemmings on behalf of an
unidentified individual (the buyer) who had expressed an interest
in purchasing the boat. Mr. Hemmings initially refused to
consider any offer. Don and the buyer persisted in their efforts
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