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of petitioners’ wages in 1999 and 2000, respectively. We are not
persuaded that petitioners were able to absorb easily the losses
attributable to the activity at Sugar Tree during these years.
As previously stated, the income reported by petitioners on their
tax returns for the years in controversy does not, in our
opinion, demonstrate that the losses incurred by petitioners were
offset either by petitioners’ income in those years or excessive
depreciation deductions claimed by them.
Moreover, whatever income petitioners may have had during
the years in issue is secondary to the primary inquiry as to
whether or not petitioners engaged in the activity with a genuine
intent to profit from it. We note that petitioners had no other
income in the years at issue apart from Mr. Rozzano’s work and a
3-week, holiday job taken by Mrs. Rozzano at The Gap, Inc. By
1999, both of petitioners’ adult children had left the familial
home, and so, the physical work and personal efforts expended by
petitioners were not being done for the immediate benefit of
their children. We believe it unlikely, given the distance
petitioners regularly traveled to and from Sugar Tree, the
liability risk inherent to their activity, and the nature and
extent of the physical labor which they performed while at Sugar
Tree, that petitioners would maintain a hobby costing thousands
of dollars and entailing much physical labor.
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