Lucian T. Baldwin, III - Page 49

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          financial status and income during the years at issue, BAC’s and            
          petitioner’s failure to follow the advice of BAC’s president                
          regarding steps that should be taken to make BAC a profitable               
          venture, and the substantial personal use of BAC’s aircraft by              
          petitioner and his invited guests.                                          
               Our review of the record in this case confirms that BAC was            
          not an activity engaged in for profit but rather was an activity            
          established, structured, and operated primarily for the personal            
          use and benefit of petitioner.  We reach this conclusion by                 
          applying the factors set forth in section 1.183-2(b), Income Tax            
          Regs., to the extent pertinent to our analysis, to the relevant             
          facts established by the record.                                            
               After petitioners purchased Granot Loma in 1987, petitioner            
          decided to purchase the first of two aircraft.  On May 20, 1988,            
          petitioner purchased a King Air and formed BAC to own and operate           
          the aircraft.  In August 1988, BAC traded in the King Air for the           
          Sabre.  Petitioner regularly used BAC’s Sabre to transport                  
          himself and his family, friends, and business acquaintances to              
          Granot Loma.  In an effort to structure the operation and use of            
          the Sabre as a business, petitioner arranged for BAC to invoice             
          one of his other companies each time the Sabre was used.  At no             
          point during any of the years at issue did BAC offer the Sabre              
          for charter by third parties or take the steps necessary to                 
          position the Sabre for use in a charter or leasing business.                

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