Why Champ Car folded in 11th hour
Dear Hector, The IRS looks at a business that does not show a profit in 3 of 5 consecutive years and says it could be a hobby, which means you cannot write off your losses. Champ Car was formed in January 2004 when it acquired the assets of CART in bankruptcy court. Champ Car had loses from 2004 clear through 2007 (4 straight years) and 2008 was sure to be another big money loser. So although we don't know all the facts, it may be that Kalkhoven and Forsythe (one or both, we hear Kalkhoven) were willing to write-off the huge losses they were incurring when Uncle Sam was essentially paying for a good chunk of them. However, faced with having to absorb 100% of the losses out of their own pocket going forward, and no business plan that showed a way forward to profitability, we suspect a quick decision was made to pull the plug. In essence, it was a hobby for Kalkhoven and Forsythe, who despite being warned, were largely hands-off and let others run the day-to-day operations……..and they ran it right into the ground. Mark C.