Nadeem Chowdhury and Brenda S. Garth Chowdhury - Page 5

                                        - 4 -                                         
          Commissioner, 94 T.C. 685, 689 (1990); DeVenney v. Commissioner,            
          85 T.C. 927, 930 (1985).  The fact that respondent eventually               
          loses or concedes the case does not establish an unreasonable               
          position.  Sokol v. Commissioner, 92 T.C. 760, 767 (1989).                  
               In this case, respondent disallowed petitioners' Schedule C            
          deductions for their mail order activity.  Petitioners started              
          the mail order activity in 1992.  Thereafter, petitioners                   
          reported 6 consecutive years of losses on their Schedules C.                
               The information petitioners initially provided to the                  
          revenue agent showed that petitioners ran one advertising                   
          campaign per year in the first 4 years and none in the next 2               
          years, that petitioners spent 10 to 15 hours per week on the                
          activity, and that they had never modified their original                   
          business plan.  Based on this limited information, respondent               
          concluded that the mail order activity was not entered into for             
          profit under section 183.                                                   
               Petitioners provided the same limited information to the               
          Appeals officer.  Because petitioners did not provide any                   
          additional information, the Appeals Division issued the statutory           
          notice of deficiency.  The notice of deficiency stated that                 
          petitioners had not established that the activity was entered               
          into for profit, that the claimed Schedule C expenses were                  
          ordinary and necessary as required under section 162, or that the           
          expenses were not personal in nature.                                       

Page:  Previous  1  2  3  4  5  6  7  8  Next

Last modified: May 25, 2011