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concerned. The only person with resort management experience
whom petitioner apparently consulted visited Granot Loma once and
merely opined that the property might be used as a resort
property without any apparent analysis of the pertinent financial
data and without the benefit of any market study into the
feasibility of operating such a resort profitably.
Petitioner has conceded that Granot Loma was never operated
as a commercial resort and that only invited guests stayed there
during the years at issue. In testimony at trial, that
concession was explained, at least in part, by the admission that
petitioners did not want to open Granot Loma to uninvited guests
because it would interfere with their use of the property. The
evidence also suggests that, during the years at issue, LFI did
not have the licenses and permits to operate a commercial
facility required under Michigan State law, that Granot Loma was
not insured for business use, and that LFI did not file State
liquor tax returns or collect sales tax on its purported gross
receipts. Although petitioner vociferously proclaimed throughout
the trial that LFI operated Granot Loma for profit and was a real
business, LFI did not take even the most minimal of steps under
Michigan State law to make its alleged rental activity function
like a real business.
Petitioner argues that LFI made changes in its operation of
Granot Loma to foster profitability. The principal change he
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