Walter C Demattia and Elizabeth J. Crouse - Page 12

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          Northwestern University, and the director of the Senior PGA tour.           
          Dr. DeMattia testified that, prior to entering into the                     
          sponsorship agreements, and on the advice of an attorney, he                
          talked to numerous amateur players in order to determine the                
          content of similar sponsorship agreements.  Based on these                  
          conversations, he took a draft sponsorship agreement to his                 
          attorney Pat Ledwidge.  Petitioners also claim that Dr. DeMattia            
          made forecasts and estimates of the activity's likely expenses              
          and revenues, to include entry fees and motel costs.  Second,               
          petitioners cite Dr. DeMattia's record-keeping system as evidence           
          that he conducted the activity in a businesslike manner.  Third,            
          petitioners contend that Dr. DeMattia took numerous actions to              
          ensure the eventual profitability of his investment, including              
          consultations with advisers regarding his son's performance.                
               Petitioners have not persuaded us that Dr. DeMattia                    
          conducted the sponsorship activity in a businesslike manner.                
          First, the agreements fail to set any goals or financial                    
          conditions that had to be met.  The agreements fail to specify              
          any minimum number of tournament entries by Constant or place a             
          cap on Dr. DeMattia's potential liability for Constant's yearly             
          expenses.  Second, we find Dr. DeMattia's investigation into the            
          potential profitability of the golf sponsorship to be lacking.              
          Among other things, Dr. DeMattia testified that he had not                  
          calculated what Constant's earnings would have to be in order for           





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