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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 the
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