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testified that Granot Loma “operated no differently than a
Marriott or a Radisson”. Mr. DiMaggio also testified that LFI
was operating as a business during 1988 because “people were
staying up there, overnight stays for business purposes.” In
justifying the decision to depreciate Granot Loma, Mr. DiMaggio
testified that “the property was placed in service from a
business standpoint the minute Mr. Baldwin purchased it”, a
position petitioner consistently espoused throughout the trial
and briefing of this case.
Petitioner was obligated to prove that he gave all pertinent
information necessary to decide the proper tax treatment of
Granot Loma and the aircraft to Mr. DiMaggio. Mr. DiMaggio’s
testimony leaves us with considerable doubt that petitioner gave
Mr. DiMaggio all of the information necessary to determine
whether and to what extent LFI and BAC were actually operating a
trade or business within the meaning of section 162 or whether
the activities conducted by the corporations were not engaged in
for profit within the meaning of section 183.
Having observed Mr. DiMaggio and petitioner at trial and
heard their testimony, we have no doubt that petitioner was an
important and demanding client of Mr. DiMaggio, that Mr. DiMaggio
wanted to keep petitioner happy, and that Mr. DiMaggio, without
having first received relevant and accurate information, either
concluded or accepted petitioner’s conclusion that LFI and BAC
were legitimate businesses. Mr. DiMaggio’s apparent willingness
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