- 28 -
76 F.3d 378 (6th Cir. 1996). Furthermore, the evidence
establishes that B&H would have made the required monthly
payments regardless of petitioner’s racing activities.
All expense deductions claimed by Flair Racing for the years
in issue were either nondeductible personal expenses of
petitioners and their family or business expenses of Flair
Enterprises. Petitioners claimed deductions on Flair Racing’s
returns for improvements to land where petitioners and their two
sons built their personal residences, the purchase and repair of
a Harley Davidson motorcycle, and depreciation and repair
expenses incurred with respect to the Legends race cars and
trailer. Additionally, petitioners deducted on Flair Racing’s
tax returns the interest paid on their residential mortgage
secured by the 80-acre tract of land.
Because we have concluded that Flair Racing was not
conducting business during the years in issue, it is not entitled
to any business expense deductions related to any alleged racing
or advertising activities. We are convinced that petitioners
reported income as paid to Flair Racing in order to disguise the
personal nature of expenses related to the Legends race cars and
the 80-acre tract of land on which the personal residences of
petitioners and their two sons sit. Petitioners’ inclusion of
the mortgage interest deduction related to their personal
residence and surrounding land on Flair Racing’s tax returns is
Page: Previous 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 Next
Last modified: November 10, 2007