Ralph Louis Vitale, Jr. - Page 16




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          were in fact expended, but rather contests their deductibility.             
          Respondent maintains petitioner was not engaged in the trade or             
          business of being an author, and, accordingly, expenses incurred            
          for the writing (and publication of one) of his books are not               
          business expenses deductible under section 162(a).  Rather, he              
          argues, they are deductible only to the extent of the income                
          derived from the activity under section 183.12  Alternatively, if           
          the activity is found to have been entered into for profit,                 
          respondent asserts that the claimed expenses were not properly              
          deductible as ordinary and necessary under section 162 and that             
          certain expenses were not adequately substantiated under section            
          274(d).  At trial, respondent conceded that, with respect to                
          section 274(d), the only element of substantiation lacking in               
          this case is business purpose.                                              
               Petitioner bears the burden of proving by a preponderance of           
          the evidence that he was engaged in writing for profit.  Rule               
          142(a).  The test of whether a taxpayer engaged in an activity              
          for profit is whether he entered into, or continued, the activity           
          with an actual and honest objective of making a profit.  See                
          Dreicer v. Commissioner, 78 T.C. 642, 645 (1982), affd. without             


               12Sec. 183 was enacted to codify the distinction between a             
          business and a hobby and to prohibit a taxpayer from obtaining a            
          loss from an activity considered to be a hobby which was then               
          used to offset other income.  See S. Rept. 91-552, at 104 (1969),           
          1969-3 C.B. 423, 490.                                                       





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