Sherman J. Miller and Alice K. Miller - Page 9

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            1.162-2(a), Income Tax Regs.  If travel expenses are incurred for                         
            both business and other purposes, the travel expenses are                                 
            deductible only if the travel is primarily related to the                                 
            taxpayer's trade or business.  Sec. 1.162-2(b)(1), Income Tax                             
            Regs.  If a trip is primarily personal in nature, the travel                              
            expenses incurred are not deductible even if the taxpayer engages                         
            in some business activities at the destination.  Sec. 1.162-                              
            2(b)(1), Income Tax Regs.  Whether travel is related primarily to                         
            the taxpayer's trade or business or is primarily personal is a                            
            question of fact.  See Holswade v. Commissioner, 82 T.C. 686,                             
            698, 701 (1984).                                                                          
                  Petitioner states that he originally purchased the                                  
            condominium as an investment, but when he had difficulty renting                          
            it, he decided in 1987 to convert the condominium to business use                         
            as lodging when he traveled to Hayward.  Petitioner testified                             
            that it was difficult to find a hotel room in Hayward during his                          
            visits there.  However, he also stated that he had not been in                            
            business in Hayward until 1987, when he decided to use the                                
            condominium in his insurance business.                                                    
                  Petitioner called his business activity in Hayward                                  
            "prospecting".  He said that he used two primary methods of                               
            prospecting, which were direct mail and "sunshining", and that                            
            the method he used in Hayward was "sunshining".  "Sunshining",                            
            according to petitioner, was meeting people who would be likely                           
            candidates for purchasing insurance.  Petitioner stated that a                            

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