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advice may constitute nothing more than sales promotion). A
taxpayer generally should undertake a good faith investigation of
the factors that would affect profit. Westbrook v. Commissioner,
T.C. Memo. 1993-634, affd. per curiam 68 F.3d 868 (5th Cir.
1995).
Petitioner had no expertise in purchasing yachts for resale,
in owning yachts, in restoring yachts, or in chartering yachts.
Over the years, petitioner appears to have had access to
business, financial, and tax advisers. The evidence, however, is
clear that petitioner did not seek independent expert advice
relating to the purchase of the Feadship. Moreover, petitioner
did not investigate the cost of restoring the Feadship and did
not seek independent advice regarding the viability of the plan
suggested by Mogul at the time of purchase of the Feadship in
1990, and yet petitioner spent over $3.5 million on the Feadship.
Financial Status of Petitioner
Where a taxpayer has substantial income from sources other
than the activity in question and where the losses from the
activity, if allowed, would generate substantial tax benefits, an
objective other than a profit objective is suggested. Hendricks
v. Commissioner, 32 F.3d at 99; sec. 1.183-2(b)(8), Income Tax
Regs. The limitations in section 183 are designed to prevent
taxpayers from offsetting unrelated income with losses from an
activity not carried on for profit. Faulconer v. Commissioner,
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