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contacts in the industry, petitioners were able to recruit a
capable, professional crew.
The bank records of Diane Racing were originally maintained
in Washington, D.C., so Benjamin could oversee the account while
he was in Washington, D.C. Petitioners paid some boat expenses
through their personal checking accounts because some expenses
needed to be paid immediately and there was a lag time for checks
to clear from the bank account in Washington, D.C. Once Benjamin
left Washington, D.C., the bank account was moved to New York.
During the years in issue, the Diane participated in four to
nine events each season, and each event could involve multiple
races. The Diane received publicity because of its photos in
sailing calendars, in a Patagonia catalog, and in a commercial
for an Italian deodorant company.
The crew on the Diane was professionally operated. To
participate in a race, the Diane required a crew of 15 members.
Petitioners’ children had participated as members of the crew;
however, they would sail rarely because the children lived in
different cities. Mrs. Schwartz has not stepped aboard the Diane
since 1991 because of an arthritic condition.
The Activity
Petitioners expected the Diane to make a profit through the
following ways: (1) Obtaining sponsorships that included
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Last modified: May 25, 2011