Anthony J. McCarthy - Page 2




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            amounts paid in connection with his son's motocross racing                                 
            activity because the activity was not entered into for profit                              
            during the year in issue.  The Court of Appeals stated:  "The                              
            principal error in the Tax Court's decision is that it gave                                
            dispositive weight to the fact that McCarthy's son was an amateur                          
            in the tax year in question, and, therefore, '[t]here was no                               
            possibility that petitioner could have realized a profit from his                          
            management activity' in that year.  * * *  The inability to make                           
            a profit in a particular year is not, however, by itself                                   
            dispositive."  The Court of Appeals stated:                                                
                        It may be that, on remand, the Tax Court will                                  
                  conclude that the evidence relied on by McCarthy is                                  
                  insufficient to establish that he had the requisite                                  
                  profit motive.  However, such a determination must be                                
                  based on all the facts and circumstances, not merely on                              
                  one or two facts that favor the Commissioner's                                       
                  position.  See Ranciato, 52 F. 3d at 26.  On remand,                                 
                  the Tax Court should explicitly weigh factors that may                               
                  favor the taxpayer such as the manner in which McCarthy                              
                  carried on his management activities, his expertise in                               
                  the motocross business, his foregoing advancement as a                               
                  construction worker, and his financial situation.                                    
                  We have reconsidered the facts in this case on remand as                             
            instructed by the Court of Appeals, McCarthy v. Commissioner, 164                          
            F.3d 618 (1998), and remain firmly convinced that petitioner did                           
            not engage in managing and promoting his son's amateur motocross                           
            racing activity during 1993 with the requisite intent to profit.                           
            We therefore adhere to our holding in McCarthy I.                                          
                  We incorporate herein by this reference the facts found in                           
            McCarthy I.                                                                                





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