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748 F.2d 890, 893 (4th Cir. 1984), revg. and remanding T.C. Memo.
1983-165.
The losses petitioner claimed relating to the Feadship
generated significant claimed tax savings, which, if allowed,
would offset income from petitioner’s unrelated medical practice.
History of Income or Losses
Substantial losses over a number of years suggest a lack of
profit objective. Sec. 1.183-2(b)(6), Income Tax Regs. If,
however, losses result because of unforeseen circumstances beyond
the control of a taxpayer, the losses may bear less on the
question of profit objective. Id.
Chartering the Feadship resulted in losses to petitioner for
all 3 years at issue. The excessive costs relating to the repair
and restoration work on the Feadship may have been a surprise to
petitioner, but good faith, diligent, and timely investigation
into the condition of the Feadship and into the nature of the
luxury yacht charter business would have eliminated most of this
surprise and would have provided to petitioner information upon
which he would have been able to make a reasoned and calculated
decision about whether to proceed further.
By 1995, petitioner’s costs associated with the Feadship
were so high that he should have known that charter of the
Feadship would not generate income sufficient to cover those
costs. Further, in 1995, 1996, and 1997, while the Feadship was
available for charter, the Feadship also was for sale at an
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