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directors he supervises in the amount of $4 per member couple per
event.10
Petitioners have also expanded the income potential of their
fishing activity by constructing a “weigh station” at Lake O.H.
Ivie. Petitioners use the weigh station, a stage constructed on
a flatbed trailer, as a place for tournament participants to
display fish, receive fishing awards, and have their pictures
taken. Petitioners earn income from the weigh station by selling
advertising space to local businesses and by using the weigh
station to recruit additional CAST members.
Petitioners reported the following Schedule C net losses and
profits resulting from their involvement in CAST for the taxable
years 1993 through 1998:
1993 1994 1995 1996 1997 1998
Gross income $5,065 $19,788 $23,679 $30,559 $26,474 $17,103
Total expenses 22,148 41,391 37,52528,822 22,243 15,452
Net profit or (loss) (17,083) (21,603) (13,846) 1,737 4,231 1,651
Petitioners also claimed Schedule C net loss deductions for the
1991 and 1992 taxable years of $10,943 and $16,466, respectively.
In a notice of deficiency for the 1993, 1994, and 1995
taxable years, respondent determined that petitioners did not
engage in their fishing activity with an actual and honest
10 At the time of trial, petitioner supervised three newly
organized regions of CAST, while also acting as director of the
western region.
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