Guido Ruggiero and Kristin Ruggiero - Page 20

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          publication of his work.  There is no history of profit potential           
          nor any projections of profit potential from his activity.                  
          Accordingly, we conclude that petitioner did not engage in his              
          research and writing activities with the primary purpose of                 
          producing income apart from the salary he earned as a professor             
          or apart from the fellowship he received.  Therefore,                       
          petitioner's activities do not constitute a separate trade or               
          business, and the related expenses are not deductible on Schedule           
               We also disagree with respondent's determination that                  
          petitioner incurred the expenses in question in his capacity as             
          an employee of UConn.  Rather, we conclude that petitioner                  
          incurred the expenses in relation to the fellowship income.  It             
          is clear from this record that the expenses claimed relate to the           
          research and writing which petitioner engaged in pursuant to the            
          fellowship.  Since we have held that the fellowship income                  
          constitutes noncompensatory income, petitioner's fellowship                 
          expenses are deductible pursuant to section 212.                            
          2.   Rental of Petitioners' Connecticut House                               
               We now address respondent's determination with respect to              
          the items of income and expense attributable to the rental use of           
          petitioners' house.                                                         
               Respondent, employing the limitations set forth in section             
          183, determined that petitioners did not engage in the activity             

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