- 16 -
We now consider the claims of petitioners as set forth in
the amended return; viz, additional expenses for the computer
consulting activity and expenses pertaining to the minister of
music activity. In short, we must reject these claims because
petitioner has utterly failed to (1) substantiate that he had any
expenses related to his computer consulting activity in excess of
those claimed on the original return ($11,987);6 (2) that the
music activity was one engaged in for profit7 or that he incurred
any deductible expenses in carrying on such activity; or (3) that
the joint venture with Mr. Glass went beyond the preopening
stage8 or that he made any monetary contribution thereto.
6 In fact, when questioned about many of the deductions,
petitioner did not know the nature of the expenses claimed nor
how Morris arrived at the figures on the amended return.
7 To be engaged in a trade or business within the meaning
of sec. 162, "the taxpayer must be involved in the activity with
continuity and regularity and * * * the taxpayer's primary
purpose for engaging in the activity must be for income or
profit." Commissioner v. Groetzinger, 480 U.S. 23, 35 (1987).
Petitioner did not receive, nor did he expect to receive, any
compensation from CHSC, PH, or any other church organization for
his music activity, except perhaps for an occasional
reimbursement of expense.
8In order to be currently deductible, the expenses must have
been incurred after the taxpayer's trade or business actually
commenced; expenses incurred prior to such time are nondeductible
preopening expenses. Jackson v. Commissioner, 864 F.2d 1521,
1525-1526 (10th Cir. 1989), affg. 86 T.C. 492 (1986); Goodwin v.
Commissioner, 75 T.C. 424, 433 (1980); affd. without published
opinion 691 F.2d 490 (3d Cir. 1982); McManus v. Commissioner,
T.C. Memo. 1987-457, affd. without published opinion 865 F.2d 255
(4th Cir. 1988). Thus, "carrying on any trade or business."
requires a showing of more than initial research into business
potential and solicitation of potential customers or clients.
(continued...)
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