John Shackelford Fairbanks - Page 9

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          conducting the consulting activity.  Petitioner did not alter his           
          method of business or engage in new methods of finding                      
          prospective clients.  Petitioner's only substantiated                       
          advertisement for the year in issue was an entry in the 1994-95             
          edition of the American Electronics Association directory.                  
          Petitioner conceded that he continued to buy new computer                   
          equipment every year despite Fairbanks' mounting losses and a               
          dearth of clients.                                                          
               Before 1992, the year petitioner started Fairbanks,                    
          petitioner had no experience as a computer consultant.  Yet,                
          despite this lack of expertise, petitioner failed to seek out               
          expert business advice on how to conduct Fairbanks as a                     
          profitable activity.  Petitioner contends that he continually               
          strove to gain expertise in the computer consulting field by                
          reading books, attending meetings, and speaking with venture                
          capitalists.  Petitioner's testimony on this point, however, is             
               Petitioner also failed to establish that he expended                   
          significant time or effort in conducting the consulting activity            
          during the year in issue.  At trial, petitioner conceded that he            
          was unable to provide consulting services in 1995 because of the            
          long hours he worked at PCSI.  In addition to the time spent                
          working for PCSI, petitioner spent significant amounts of time at           
          home with his children and attended engineering classes at UCSD.            

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