Robert Schwartz and Diane Schwartz - Page 7

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               11.  Petitioners paid most of Diane Racing’s expenses from             
          their personal, and not Diane Racing’s, bank account.                       
               12.  Although the Diane required a 14-person crew, usually             
          all of the crew were unpaid.7                                               
               13.  Petitioners did not possess a list of crew members.               
               14.  Petitioners did not keep payroll records for the crew             
          members who were paid.                                                      
               15.  Petitioners never filed any Forms W-2 or Forms 1099 for           
          the crew members who were paid.                                             
               16.  Petitioners did not keep records of the entry fees for            
          any of the races the Diane participated in during the years in              
          issue.                                                                      
               17.  Petitioners “hoped” that they might get sponsors for              
          the yacht racing activity, but they “had no idea whether that               
          would or would not work.”                                                   
               18.  Mrs. Schwartz, who holds a doctorate in education and             
          is director of a special education master’s degree program, was             
          in charge of many financial aspects of Diane Racing.                        
               19.  Although petitioners spent, on average, a total of 15             
          to 20 hours per week working on Diane Racing, there were                    
          significant periods when petitioners devoted no time to, or were            
          not involved with, Diane Racing.                                            


               7  Diane Racing paid a captain if a captain was needed, and            
          a mate if there was a mate.                                                 





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