Lucian T. Baldwin, III - Page 29

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          1992, petitioner, through LFI, claimed that Granot Loma was used            
          exclusively for business, and continued to depreciate Granot Loma           
          buildings and improvements, to deduct all of Granot Loma’s                  
          alleged operating expenses, and to report as lodging income                 
          amounts paid or credited to LFI by petitioner’s other companies.            
          On his Federal income tax returns for 1988 through 1992,                    
          petitioner deducted passthrough losses from LFI in the aggregate            
          amount of $3,376,634.                                                       
               In support of LFI’s aggressive writeoff of Granot Loma,                
          petitioner asserts that LFI maintained extensive books and                  
          records, experimented with and abandoned unprofitable activities,           
          and consulted with various experts regarding the renovation of              
          Granot Loma as a commercial facility.  Petitioner also contends             
          that he devoted considerable time and effort to the renovation              
          and operation of Granot Loma, that he regularly used Granot Loma            
          for business meetings throughout the years at issue, and that he            
          intended, among other things, to sell Granot Loma at a profit.              
               We first examine the activities in which LFI allegedly                 
          engaged in order to ascertain whether any of those activities               
          were conducted with sufficient continuity and regularity to                 
          satisfy the threshold test for a trade or business.  Petitioner             
          contends that Granot Loma was the site of an operating Christmas            
          tree farm, a timbering operation, a maple syrup operation, and a            
          rental activity.  In connection with the lodge, LFI also sold at            

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