Sidney C. Shaw - Page 19




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          consisted of investor type activities that are not treated as               
          participation in an activity.                                               
               With respect to the evidence that may be used to establish             
          hours of participation, section 1.469-5T(f)(4), Temporary Income            
          Tax Regs., 53 Fed. Reg. 5727 (Feb. 25, 1988), provides:                     
               The extent of an individual’s participation in an                      
               activity may be established by any reasonable means.                   
               Contemporaneous daily time reports, logs, or similar                   
               documents are not required if the extent of such                       
               participation may be established by other reasonable                   
               means.  Reasonable means for purposes of this paragraph                
               may include but are not limited to the identification                  
               of services performed over a period of time and the                    
               approximate number of hours spent performing such                      
               services during such period, based on appointment                      
               books, calendars, or narrative summaries.                              
               While the regulations are somewhat ambiguous concerning the            
          records to be maintained by taxpayers, they do not allow a                  
          postevent “ballpark guesstimate”.  Carlstedt v. Commissioner,               
          T.C. Memo. 1997-331; Speer v. Commissioner, T.C. Memo. 1996-323;            
          Goshorn v. Commissioner, T.C. Memo. 1993-578.  Petitioner’s                 
          recollection and estimate of the hours that he participated in              
          Shaw Ltd. are reasonable and are corroborated by the testimony of           
          Webb and Palmer.  However, based on the description of the                  
          activities that petitioner performed, the hours that are related            
          to investor type activities such as monitoring the operations and           
          reviewing financial statements are not treated as participation             
          because petitioner was not involved in the day-to-day operations            
          of the restaurants.  Rather, the day-to-day operations of the               






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