Lucian T. Baldwin, III - Page 35

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          cites was the annual increase in the per capita rate charged for            
          a visit to Granot Loma.  While it is true that LFI increased the            
          per capita rate on an annual basis from 1990 through 1992, the              
          increases were not supported by any meaningful economic analysis,           
          and the rate increases did not have a material impact on LFI’s              
               Petitioner also argues that, when he purchased Granot Loma,            
          he intended to earn a profit from the property, at least in part,           
          by renovating and selling it as a commercial property.                      
          Petitioners paid $4,380,000 for the property, invested                      
          approximately $2,500,000 more in renovation costs, and expended             
          millions more in operating costs from 1987 through 1992.                    
          Petitioner has not convinced us that he purchased Granot Loma               
          with any intention of selling it at a profit (as opposed to using           
          it as a residence), or that he seriously believed that any                  
          appreciation in the fair market value of Granot Loma would be               
          sufficient to offset the cumulative losses and generate a profit.           
               Petitioner correctly points out that his and LFI’s intention           
          to make a profit from Granot Loma need not be reasonable, and he            
          argues that the considerable time he spent working on LFI’s                 
          alleged business activities provides objective support for his              
          subjective statement of intent.  We reject this argument because,           
          like much of the evidence petitioner cites in support of his                
          arguments, the evidence of time spent by petitioner on LFI’s                

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