- 4 - The interest item represents petitioner’s 50 percent of the interest earned on a savings account funded by the estate of petitioner’s mother. The account is in the name of petitioner’s sister, who wires amounts to petitioner on a monthly basis. Petitioner considers this as business income since he uses these funds for expenses for his writing activity. In 1995, petitioner reported income of $8,350 on his Schedule C. This amount consists of $267 of video royalties, interest of $8,022 from his sister, and $60 for services he performed as a guest lecturer for an anthropology class. None of this income was related to the writing activity. Respondent determined that the above described income is not properly reportable on a Schedule C pertaining to the writing activity. “A taxpayer may not determine the nature of his income merely by using a particular form or by labeling it as he wishes, but must report his income based on the economic realities of the situation.” Upham v. Commissioner, 923 F.2d 1328, 1335 (8th Cir. 1991), affg. T.C. Memo. 1989-253; Walker v. Commissioner, 101 T.C. 537, 544 (1993) (citing Frank Lyon Co. v. United States, 435 U.S. 561 (1978)). Petitioner agrees that none of this income was derived from his writing activity. Petitioner testified that he knew he had to report all income received and the Schedule C seemed like thePage: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 Next
Last modified: May 25, 2011