John R. and Lois J. McCarthy - Page 8




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            he sought to receive compensation for his articles.  Petitioner                            
            attended a writing conference “early on”, but he did not find it                           
            helpful.  Petitioner did not consult with any experts in the                               
            writing field about conducting a profitable writing activity.  He                          
            did not take any courses on writing fictional material or writing                          
            for the public.  Petitioner did not belong to any literary                                 
            organizations.  Petitioner studied on his own by analyzing                                 
            Writer’s Digest.                                                                           
                  Petitioner regularly analyzed literary agents and publishers                         
            to determine where he would send his material.  Petitioner wrote                           
            to various publishers seeking employment either freelance or as a                          
            staff writer.  He did not obtain any employment from the                                   
            agencies.                                                                                  
                  On Schedules C filed with petitioners’ 1993, 1994, and 1995                          
            returns, petitioners claimed the following expenses with respect                           
            to his writing activity:                                                                   
                Expense                         1993            1994          1995                     
                Car and truck                $1,220             $618        $1,234                     
                Commissions and fees          1,056              170            187                    
                Depreciation                  2,567           5,430         17,569                     
                Insurance                     1,238           1,398          1,795                     
                Legal and professional        4,398              293         1,107                     
                Office                           462             375            987                    
                Rent- business prop              284             349            392                    
                Repairs and maint.            1,790              220            -0-                    
                Supplies                      2,196           3,124          1,273                     
                Taxes and licenses               265             199            186                    
                Travel                           -0-             720            920                    
                Publications                 552             734            1,848                      
                Total1                       16,028          13,630         27,498                     







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