- 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