John Gallo - Page 12

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          a paralegal as an independent contractor out of his home.  In               
          accordance with his belief, petitioner set up his home office               
          with the necessary research materials and equipment.  During 1991           
          and 1992, while petitioner did not derive income from his                   
          paralegal skills, he was hopeful that he was on the road to                 
          recovery based upon the representations of his medical providers.           
               Clearly the activities of a boat repair person and a                   
          paralegal are separate and distinct.  It is not logical that                
          these two activities be combined as one trade or business on one            
          Schedule C.  Accordingly, we hold that the income and expenses              
          for each activity should be treated separately.  We further hold            
          that petitioner, in 1992, realistically had no likelihood of                
          reentering the boat repair field.  His maintenance of the tools,            
          some of which were monogrammed, was more for sentimental reasons            
          than for business potential.  Consequently, in 1992, he was no              
          longer in hiatus from that activity and thus no longer “carrying            
          on” that trade or business.  Accordingly, petitioner is not                 
          entitled to deduct the storage expense incurred for his boat                
          supplies and tools.                                                         
               On the other hand, petitioner was in hiatus from earning his           
          living as a paralegal.  Indeed, the actions he took in 1991 and             
          1992 to bolster his opportunities and abilities to earn a living            
          from that profession support this conclusion.  Respondent’s                 
          contentions that petitioner was merely in a startup phase of his            

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