Ralph Louis Vitale, Jr. - Page 23




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          or business until 1993, the tax years in issue mark the initial             
          stages of his activity.  A significant amount of petitioner's               
          total deductions for 1993 and 1994 were travel expenses, which he           
          incurred to collect material for his books.  Now that such                  
          material has been amassed and incorporated in the manuscripts,              
          petitioner, as a published author, expects his writing activity             
          to be profitable.  To remedy the unforeseeable circumstance of              
          his publisher's going bankrupt, petitioner has demonstrated that            
          he has ideas and plans for future publications which would enable           
          him to recoup not only his expenses, but also to make a profit.             
          See Golanty v. Commissioner, 72 T.C. 411, 427 (1979) ("The goal             
          must be to realize a profit on the entire operation, which                  
          presupposes * * * sufficient net earnings to recoup the losses"             
          (quoting Bessenyey v. Commissioner, 45 T.C. 261, 274 (1965),                
          affd. 379 F.2d 252 (2d Cir. 1967))), affd. without published                
          opinion 647 F.2d 170 (9th Cir. 1981).                                       
               Second, these losses should be viewed in the context of the            
          nature of petitioner's activity.  Works of fiction are difficult            
          to write and to market.  We are persuaded by petitioner's state-            
          ment that first-time authors are not normally offered cash                  
          advances.14  It is not surprising then, that, for the first 2               
          years of his writing activity, petitioner sustained losses.  This           


               14Advances are payments to an author before publication.               





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