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The Government contends that petitioner was not engaged in a
trade or business. According to the Government, petitioner
merely conspired to set up a gambling operation with the Rincon
Indians. The Government characterizes this as "a mere
expectation" of a future business that is not deductible. See
Ellis v. Commissioner, T.C. Memo. 1967-94 (expenses for a
business that never materialized were not deductible).
As we indicated above, petitioner's trade or business
consisted of furthering the interests of the Chicago organized
crime family. These interests, as listed in the indictment,
included bookmaking, loansharking, extortion, illegal gambling,
and fraud. The Rincon gambling operation was one such endeavor.
And while it is true that an expense incurred in a mere
expectation of a future business is not deductible, an expense
incurred from an activity entered into with the genuine intention
of making a profit is. International Trading Co. v.
Commissioner, 275 F.2d 578, 584 (7th Cir. 1960), affg. T.C. Memo.
1958-104. Petitioner entered into the Rincon gambling operation
with the genuine intention of making a profit.
The Government also relies on Accardo v. Commissioner, 942
F.2d 444 (7th Cir. 1991), affg. 94 T.C. 96 (1990). In Accardo,
the taxpayer was indicted but acquitted of racketeering charges.
Id. at 446. He attempted to deduct his legal fees from the RICO
prosecution. The taxpayer could not validly claim a deduction
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