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determining whether a taxpayer conducted an activity in a
businesslike manner, we consider whether the taxpayer maintained
complete and accurate books and records, whether the activity was
conducted in a manner substantially similar to comparable
businesses that are profitable, and whether changes were
attempted to earn a profit. Engdahl v. Commissioner, 72 T.C.
659, 666-667 (1979); sec. 1.183-2(b)(1), Income Tax Regs.
Petitioners carried on the jet charter activity in a
businesslike manner during the relevant years. Petitioners
sought and obtained a rule 135 certificate from the FAA that
enabled them to operate BHJ as a third-party charter service.
The FAA required petitioners to keep a maintenance manual and an
operations manual and also required higher maintenance and pilot
training standards to maintain a rule 135 certificate. The FAA
did not impose these requirements on enterprises not maintaining
a rule 135 certificate. The FAA also required petitioners to
charge a Federal excise tax on all flights. Petitioners kept
complete and accurate books and records for the jet charter
activity and employed two bookkeepers approximately full time in
the aggregate on this activity during the relevant years.
Petitioners advertised the jet charter activity through
various means. Mr. Rabinowitz solicited charter business from
owners of other aircraft. Petitioners created flyers and
advertisements (including an ad in The Air Charter Guide, a trade
publication), and paid the chief pilot on commission to solicit
charters.
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