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During 1993, petitioner did not reimburse her personal account
with funds from her writing activity account. Petitioners
consulted with an accountant in structuring their records and in
categorizing various expenses for Federal income tax purposes.
Petitioner's father died in 1993. Petitioner and her sister
were the sole beneficiaries of their father's estate, which was
worth about $1.5 million.
The following items of income were reported on petitioners'
Federal income tax returns for the years in issue:
1993 1994
Wages $57,466.00 $50,032.38
Interest income 37,185.93 45,998.54
(incl. tax-exempt int.)
Dividend income 14,748.32 6,516.50
Capital gain (loss) 17,307.15 (3,000.00)
Social Security benefits 6,187.20 6,349.20
Petitioners began treating her writing activity as a trade
or business in 1990. The income and expenses attributable to
that activity from that year on were reported on a Schedule C.
As of the date of trial, petitioner's writing activity had not
resulted in a profit for any year, as reflected in the following
table:
Year Net Loss
1990 $6,463.28
1991 7,732.60
1992 7,822.23
1993 17,064.66
1994 13,823.70
1995 11,047.00
Total 63,953.47
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