Guido Ruggiero and Kristin Ruggiero - Page 19

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          in a trade or business within the meaning of section 162,11 "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).  Although a reasonable                 
          expectation of a profit is not required, the taxpayer must have             
          entered the activity, or continued it, with the bona fide                   
          objective of making a profit, as indicated by the surrounding               
          facts and circumstances.  Taube v. Commissioner, 88 T.C. 464,               
          478-479 (1987); sec. 1.183-2(a), Income Tax Regs.  The                      
          regulations accompanying section 183 contain a nonexhaustive list           
          of nine factors to consider when determining whether an activity            
          is engaged in for a profit.  Sec. 1.183-2(b), Income Tax Regs.              
               University professors, in their capacity as educators,                 
          regularly conduct research and produce scholarly materials                  
          pertaining to their particular area of competence.  In addition,            
          the receipt of the fellowship, as well as the publication of                
          Binding Passions, enhanced petitioner's reputation as a scholar,            
          and was certainly considered for purposes of determining his                
          salary in succeeding years.  Moreover, despite the royalty                  
          agreement in the record, petitioners have offered little evidence           
          concerning the amount of income earned by petitioner for the                

               11  Sec. 162(a) provides that there shall be allowed as a              
          deduction all the ordinary and necessary expenses paid or                   
          incurred during the taxable year in carrying on any trade or                

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