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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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