-8-
Ms. Little’s valuable original designs because petitioners could
bring them on the jet. The garments never were out of their
sight.
CFI became a very lucrative business for petitioners during
the relevant years. Petitioners together earned wages from CFI
of $840,000 to $5.5 million during each of the years in issue.
Modifications to the Jet Charter Activity
After a few years, petitioners became concerned that the
Mitsubishi was not generating sufficient revenue. Petitioners
analyzed both the cost side and the revenue side of their jet
charter activity. On the cost side, petitioners noted that the
Mitsubishi incurred high fixed costs that generally would not
vary according to the size of the aircraft, such as a hangar,
pilots, and other full-time employees. On the revenue side,
petitioners recognized that the Mitsubishi did not generate many
charters. The Mitsubishi was a smaller aircraft and had a
limited range. It could travel from the coast only to about
midcountry and then needed to be refueled. Although the time it
took to refuel was minimal, charter customers preferred to travel
nonstop and generally preferred to charter a jet that did not
require refueling to travel across the country. Mr. Rabinowitz
also believed that the Mitsubishi was not comfortable for
passengers and understood the marketplace was generally
interested in chartering larger aircraft. Therefore, petitioners
were faced with high fixed costs to own and operate the
Mitsubishi and low demand to charter such a small jet.
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