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of an existing trade or business in the same field as that
entered into by the taxpayer. Sec. 195(c)(1)(B).
After petitioner sold Washington Chocolate, he decided he
wanted to become an ancient artifacts dealer. Petitioner had
developed an interest in ancient artifacts during childhood and
had built a substantial personal collection.
In the fall of 1989, petitioner traveled to Sedona, Arizona,
and purchased his first artifact for his commercial inventory
from Donald Corsette (Corsette). Throughout 1990, petitioner
made frequent trips to Sedona and made several purchases from
Corsette. In December 1990, petitioner traveled with Corsette to
Geneva, Switzerland, where he purchased additional artifacts from
Phoenix Ancient Art.
Petitioner testified that when dealing in ancient artifacts,
having a gallery bolsters a dealer's credibility. Therefore,
during 1990 petitioner began to look for retail space in and
around the Union Square area of San Francisco in which he could
operate a gallery for his ancient artifacts. Petitioner located
acceptable retail space in San Francisco, negotiated a lease,
received drawings, and met with contractors who would construct
leasehold improvements on the space. The plan for a San
Francisco gallery was abandoned, however, because petitioner did
not have sufficient inventory for the gallery space. Instead,
petitioner decided he would operate his gallery from his personal
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