Robert & Diane Schwartz - Page 17




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          no doubt that petitioners have expertise in the sailboat                    
          industry.                                                                   
               Further, petitioners joined the Association specifically to            
          learn about 50-foot sailboat industry from the professionals in             
          the field.  Mr. Schwartz also consulted with others in the                  
          business who could advise him regarding the expenses involved               
          with 50-foot sailboats and how to reduce those expenses.                    
          Time and Effort Expended by Petitioners                                     
               The fact that the taxpayer devotes much of his personal time           
          and effort to carrying on an activity may indicate an intention             
          to derive a profit.  Sec. 1.183-2(b)(3), Income Tax Regs.                   
          Petitioners testified that they spent an average of 15 to 20                
          hours per week on Diane Racing.  We find this time spent                    
          indicative of petitioners’ commitment to this endeavor.                     
          Success of Petitioners in Carrying On Other Activities                      
               We have recognized that a taxpayer’s success in other                  
          business activities may indicate a profit objective.  See Hoyle             
          v. Commissioner, T.C. Memo. 1994-592; sec. 1.183-2(b)(5), Income            
          Tax Regs.  We conclude that petitioners’ success in other                   
          sailboat activities (e.g., reselling the Baltic 39 and Baltic 48            
          at a profit, chartering the Soverel 50) indicates a profit                  
          objective.                                                                  










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Last modified: May 25, 2011