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Petitioners were concerned about the presence of a jet on CFI’s
balance sheet. Petitioners ensured the activities were treated
separately as long as they existed. Accordingly, petitioners
caused BHJ to invoice CFI for, and CFI to pay for, each of CFI’s
charter flights on the Falcon.
After reviewing the above factors and the facts and
circumstances of this case, we find it is inappropriate to treat
BHJ and CFI as one activity for purposes of applying the section
183 rules. See Schlafer v. Commissioner, T.C. Memo. 1990-66;
sec. 1.183-1(d)(1), Income Tax Regs. Accordingly, we shall
examine whether petitioners engaged in the jet charter activity
for profit without consideration of whether petitioners engaged
in CFI for profit. See sec. 1.183-1(d)(1), Income Tax Regs.
C. Whether Petitioners Engaged in BHJ for Profit
In determining whether petitioners engaged in the jet
charter activity for profit, we structure our analysis around
nine nonexclusive factors. Sec. 1.183-2(b), Income Tax Regs.
The nine factors are: (1) The manner in which the taxpayer
carries on the activity; (2) the expertise of the taxpayer or his
or her advisers; (3) the time and effort expended by the taxpayer
in carrying on the activity; (4) the expectation that the assets
used in the activity may appreciate in value; (5) the success of
the taxpayer in carrying on other similar or dissimilar
activities; (6) the taxpayer’s history of income or loss with
respect to the activity; (7) the amount of occasional profits, if
any, which are earned; (8) the financial status of the taxpayer;
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