Walter C Demattia and Elizabeth J. Crouse - Page 11

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          in a businesslike manner:  (1) Dr. DeMattia failed to adequately            
          assess the activity's profitability; (2) the sponsorship                    
          agreements failed to limit Dr. DeMattia's potential liability or            
          require Constant to participate in a minimum number of                      
          tournaments during any given year; (3) Dr. DeMattia failed to               
          maintain expense ledgers or journals indicating expenses incurred           
          or the specific reason for expenses incurred; (4) Dr. DeMattia              
          failed to document Constant's golf performance at any given                 
          tournament, the number of tournaments entered, or the potential             
          prize money available at any given tournament.  Respondent also             
          argues that Dr. DeMattia's failure to implement any changes in              
          operating procedures and methods in response to mounting losses             
          indicates a lack of profit motive.                                          
               Petitioners argue that Dr. DeMattia entered into the                   
          agreements and conducted the activity in a businesslike manner.             
          First, petitioners cite Dr. DeMattia's preliminary investigation            
          into the feasibility of the sponsorship as evidence of the                  
          requisite intent.  Dr. DeMattia testified that his decision to              
          sponsor his son was based on extensive research.  For example, in           
          order to evaluate the investment's profitability potential, he              
          talked to a number of knowledgeable people regarding his son's              
          likelihood of playing on the PGA tour.  Among others, Dr.                   
          DeMattia spoke to his son's college coach at Stetson University,            
          the head golf instructor for Golf Digest, the golf coach at                 





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