Robert & Diane Schwartz - Page 20




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          profit.  During the years in issue, petitioners were concerned              
          about their financial status because Mr. Schwartz took time from            
          work for his surgery, petitioners paid for their three children             
          to attend graduate school, and petitioners experienced a large              
          loss in savings because of a bad pension administrator.  During             
          these years, petitioners felt that they could not be involved               
          with an activity that would result in large losses.                         
          Elements of Personal Pleasure or Recreation                                 
               The absence of personal pleasure or recreation relating to             
          the activity in question may indicate the presence of a profit              
          objective.  Sec. 1.183-2(b)(9), Income Tax Regs.  The mere fact             
          that a taxpayer derives personal pleasure from a particular                 
          activity does not, per se, demonstrate a lack of profit motive.             
               We are convinced that the personal pleasure of owning and              
          using the Diane was secondary to petitioners’ use of the Diane              
          for profit because, during the years in issue, petitioners owned            
          other boats that were used solely for personal pleasure or                  
          recreation and the Diane had no personal amenities (e.g., no                
          toilet, sleeping quarters, etc.).  Further, Mrs. Schwartz had not           
          stepped aboard the Diane since 1991 because of an arthritic                 
          condition.                                                                  
          Conclusion                                                                  
               We hold that petitioners met their burden of proving that              
          the Diane’s activity was engaged in with an actual and honest               






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