Rick and Ruth Baime Richards - Page 9

                                        - 9 -                                         
          position.  See Dunn v. Commissioner, 70 T.C. 715, 720 (1978),               
          affd. 615 F.2d 578 (2d Cir. 1980); sec. 1.183-2(b), Income Tax              
          Regs.  Certain elements are given more weight than others because           
          they are more meaningfully applied to the facts in our case.                
               Upon reviewing the entire record, we conclude that, during             
          the year at issue, Mr. Richards was engaged in his writing                  
          activity with the requisite profit objective.                               
               We first look to the manner in which Mr. Richards carried on           
          the activity.  Mr. Richards managed some aspects of this activity           
          in a businesslike fashion.  He hired agents to help him with                
          negotiating prices for the sale of his screenplays.  Moreover,              
          Mr. Richards has a long professional history as a writer--and as            
          a successful writer.  Mr. Richards has numerous contacts and                
          devotes much of his time and energy to carrying on this activity.           
          Mr. Richards did not have income from other sources, and                    
          petitioners did not derive great tax benefits from the claimed              
               Although Mr. Richards’ efforts were not successful in                  
          producing net profits for a number of years, this may be the                
          result of at least two factors:  (1) The precarious nature of the           
          entertainment business, and (2) the claiming of expenses not                
          properly allocable to the writing activity.  We do not believe              
          that the lack of unreported income in this situation negates the            
          presence of a profit objective.  We hold that Mr. Richards was a            

Page:  Previous  1  2  3  4  5  6  7  8  9  10  11  12  13  14  15  16  17  18  19  20  Next

Last modified: May 25, 2011