James R. and Myrtice L. Peacock - Page 22

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               Petitioners argue that this factor weighs heavily in their             
          favor.  We disagree.  Although petitioners studied tournament               
          fishing and competitions from the point of view of a contestant,            
          and were very good fishers at that, they never undertook a basic            
          investigation of the factors that affected the profitability of             
          the fishing activity.  See Underwood v. Commissioner, T.C. Memo.            
          1989-625.  Petitioners were aware of the large cash prizes which            
          could be won at the tournaments and believed that they could win            
          many of those prizes because their skills were superior to those            
          of other contestants.  Petitioners, however, never seriously                
          studied tournament fishing from a businessperson’s point of view;           
          e.g., they never researched or solicited advice on the magnitude            
          of expenses which they were likely to incur in attempting to win            
          the prizes.  In fact, we are unable to find in the record that              
          petitioners ever performed any meaningful economic study on the             
          profit potential of tournament fishing.8  See Vallette v.                   
          Commissioner, T.C. Memo. 1996-285.  Petitioners’ expertise and              
          experience in fishing is counterweighed by their lack of                    
          knowledge on the economics of tournament fishing.  This factor is           

               8 By contrast, petitioners did solicit advice on the best              
          way to catch the desired fish and hired a seasoned crew to help             
          reach that goal.  The fact that they solicited such advice and              
          hired the crew, but never requested advice on the economics of              
          the fishing activity, reinforces our conclusion that petitioners’           
          participation in the fishing activity was recreational.                     

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