-25-
Both petitioners also have considerable business knowledge
and skills not directly related to the jet charter industry.
Petitioners built CFI into an organization that had hundreds of
millions of dollars in sales at its peak. The skills required to
build such a successful business undoubtedly assisted Mr.
Rabinowitz in his work for the jet charter activity. In
addition, although Mr. Rabinowitz may not initially have been
familiar with the intricacies of the jet charter industry, he
knew about marketing, employee relations and other essential
tools necessary to run a business, all of which he put to use
operating the jet charter activity.
In sum, petitioners hired skilled staff members to assist in
operating the jet charter activity. Mr. Rabinowitz has also
demonstrated that he has considerable business knowledge and
undertook efforts to become familiar with industry practice.
These facts support a conclusion that petitioners operated the
jet charter activity for profit.
3. The Time and Effort Expended by the Taxpayer in
Carrying On the Activity
We next consider the time and effort petitioners expended on
the jet charter activity. A taxpayer’s devotion of much time and
effort to conducting an activity, particularly if the activity
does not have substantial personal or recreational aspects, may
indicate an intention to derive a profit. Sec. 1.183-2(b)(3),
Income Tax Regs. The fact that a taxpayer devotes a limited
amount of time to an activity does not necessarily indicate a
Page: Previous 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 NextLast modified: May 25, 2011