Wilbur Kenneth Griesmer - Page 6

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          negative $40,112, respectively, and accordingly did not report               
          any income tax liability for those years.                                    
               In the notice of deficiency, respondent determined that                 
          petitioner did not engage in his meteorite and pyrite collection             
          activity for profit within the meaning of section 183.                       
          (Alternatively, respondent determined that petitioner failed to              
          substantiate the expenses claimed.)   Respondent also                        
          recharacterized the gross income reported on petitioner's                    
          Schedules C as interest income properly reportable on Schedules B            
          and line 8a of Forms 1040.                                                   
               Respondent contends that petitioner is not entitled to the              
          claimed Schedule C losses because petitioner's meteorite and                 
          pyrite collection activity was not engaged in for profit.  In the            
          alternative, respondent contends that petitioner failed to                   
          substantiate the claimed losses.                                             
               Under section 183(a), if an activity is not engaged in for              
          profit, then no deduction attributable to that activity is                   
          allowable except to the extent provided by section 183(b).  In               
          pertinent part, section 183(b) allows deductions to the extent of            
          gross income derived from such activity.8                                    

          8  As previously stated, petitioner did not derive any gross                 
          income from the sale of meteorites or pyrite in 1995 or 1996;                
          rather, the gross income that he reported on his Schedules C                 

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