Lucian T. Baldwin, III - Page 32

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          of his argument that petitioner’s and LFI’s use of Granot Loma              
          was not an activity for profit are the substantial history of               
          losses generated by the alleged business activity, the complete             
          lack of any profits from the activity over a 6-year period,                 
          petitioner’s financial status during the years at issue, and the            
          personal pleasure and recreation derived by petitioners from                
          their use of Granot Loma.                                                   
               The record in this case reveals that petitioners purchased             
          Granot Loma and renovated the lodge and other parts of the                  
          property, in part, for possible commercial use in the future.  In           
          so doing, petitioner consulted with advisers regarding equipment            
          and systems to be installed in the lodge and around the property            
          to support commercial use.  The record also reveals, however,               
          that the renovation was designed to enable petitioner and his               
          family to use Granot Loma as their residence.                               
               Whatever petitioner’s intention might have been regarding              
          the operation of Granot Loma as a commercial property at some               
          point in the future, the evidence convinces us that Granot Loma             
          was purchased primarily for use as petitioners’ residence and it            
          was used primarily as a residence; i.e., as petitioners’ vacation           
          home.  Like any other residence, Granot Loma was used by                    
          petitioners for their own enjoyment and to entertain family,                
          friends, and business acquaintances.  Occasional entertainment of           
          petitioner’s business acquaintances, however, does not support a            

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