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deductions or other expenses or report any other income on their
1989, 1990, or 1991 individual income tax returns relating to the
muscle car collection. In contrast, FGI, TTI, and BEL claimed
considerable expenses during these years, primarily for the
acquisition and renovation of petitioners' muscle car collection.
Respondent has determined that these expenses were improperly
deducted by the corporations. Although petitioners do not
dispute respondent's determination, they now contend that they
were in the muscle car business during the years in issue and are
entitled to deduct these expenses under section 162(a) on their
individual Federal income tax returns.
During the years in issue, it was Mr. Garrett's general
intention to open a muscle car museum at some future time in
order to exhibit his collection of muscle cars and possibly sell
some of the cars on display. In 1993, Mr. Garrett incorporated
Floyd Garrett's Muscle Cars, Inc. (FGMCI), under the laws of the
State of Tennessee. At the time of trial, Mr. Garrett had chosen
a location in Sevierville, Tennessee, and was in the final stages
of constructing a building on this site to house his collection
of muscle cars. However, the muscle car museum was not open to
the public at any time during the years in issue and had not yet
opened at the time of trial. FGMCI owns the realty and the
museum building and will have the occupational licenses and
insurance to run Mr. Garrett's proposed muscle car museum. It is
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