Csaba L. Magassy and Frances H. Magassy - Page 26

                                       - 26 -                                         
          Section 1231 Loss                                                           
               It is clear that petitioner’s original purchase of the                 
          Feadship in 1990 and his restoration efforts during the early               
          1990s did not constitute a trade or business and would not                  
          qualify his $1.93 million loss on the 1997 sale of the Feadship             
          for section 1231 ordinary loss treatment.  Petitioners argue,               
          however, that the 1995, 1996, and 1997 charter activity (combined           
          with petitioner’s original 1990 profit objective for purchasing             
          the Feadship) constituted a sufficiently regular for-profit                 
          activity that the $1.93 million claimed loss on sale of the                 
          Feadship should qualify for section 1231 ordinary loss treatment.           
               On the facts of this case, certainly by 1995 and thereafter            
          through April of 1997, when petitioner sold the Feadship for                
          $1.1 million, petitioner did not have a good faith profit                   
          objective relating either to the charter of the Feadship or to              
          the sale of the Feadship.  During 1995, 1996, and 1997,                     
          petitioner’s and SMSM’s objective in the charter of the Feadship            
          was to provide funds to offset a portion of the costs of                    
          ownership of the Feadship.                                                  
               Also, because of the lack of profit objective associated               
          with the charter of the Feadship, the charter activity relating             
          to the Feadship in 1995 through April of 1997 did not constitute            
          a trade or business, and the Feadship does not qualify for                  
          treatment as trade or business property under section 1231.                 
          Abbene v. Commissioner, T.C. Memo. 1998-330; Budin v.                       
          Commissioner, T.C. Memo. 1994-185.                                          





Page:  Previous  8  9  10  11  12  13  14  15  16  17  18  19  20  21  22  23  24  25  26  27  Next

Last modified: May 25, 2011