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old son allegedly entered into an oral agreement as to Benjamin's
racing future. Petitioner did maintain receipts for the expenses
he paid during 1993 in support of Benjamin's motocross racing
activity. Petitioner also kept records showing that Benjamin,
who was not eligible to win cash prizes, won $2,525 in
contingency certificates in 1993, redeemable in racing equipment
and other merchandise. Petitioner also reported on his 1993
Federal income tax return $2,250 worth of the above-mentioned
certificates as a "management fee" from Benjamin.
Petitioner had no written plan or any financial analysis of
the profit potential of his activity. His skeletal records serve
only to substantiate the expenses claimed by him on his 1993
return. Otherwise, his records do not serve to establish a
business activity with a potential for profit.
This factor favors respondent.
2. The Expertise of the Taxpayer or His Advisers.
Petitioner performed repairs and maintenance on the
motorcycles used by his son, helped train his son, and decided
which races his son would enter and what size motorcycle his son
would ride. Although these facts may seem to favor finding that
petitioner had expertise in racing (or managing a racer), a
distinction must be drawn between expertise in conducting an
activity and expertise in the economic and business aspects of an
activity: the former is consistent with a hobby interest, while
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