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aircraft. In addition, Mr. Rabinowitz also spent at least 50
hours per week on his work for CFI.
Personal Use of the Jet
Petitioners did use the Falcon for some personal travel, but
not very often. Each time petitioners used the Falcon for
personal travel, BHJ billed them and they paid BHJ from their
personal checking account. Petitioners’ accountants verified
that an invoice was prepared for personal travel and Mr.
Rabinowitz paid the invoices. Petitioners’ daughter, Jennifer
Heft, who was a merchandising employee of CFI, also made trips in
the Falcon to meet with Ms. Little concerning various CFI
matters. BHJ billed CFI, and CFI paid BHJ, for each of Ms.
Heft’s trips.
Arrangement With Verna Harrah
Verna Harrah (Ms. Harrah), a woman Mr. Rabinowitz was dating
from 1990 through 1995 while he was separated from Ms. Little,
and who was involved in a movie business with Mr. Rabinowitz,
also owned a jet, which cost approximately four times as much as
petitioners’ jet. Ms. Harrah’s jet had nicer amenities and could
fly to Europe and South America. Petitioners agreed with Ms.
Harrah that each would look to the other first when they needed
to use an aircraft and their own aircraft was busy, and that the
rate for the use of the other’s aircraft would be the direct
costs of operation only. Direct costs of operation were those
costs related to the flying time and included a specified amount
for wear and tear on the aircraft, fuel, and engine maintenance.
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