Jeffrey Tamms - Page 11




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          Since 1994, petitioner has regularly produced photography                   
          exhibitions each year.  As a consequence, since 1995 JJT has                
          reported net profits each year.  Petitioner has devoted a                   
          significant amount of time to his Schedule C activity, is a                 
          member of numerous professional photography associations, and has           
          exhibited his photography in numerous exhibits, winning numerous            
          awards and critical acclaim for his photographic works.  Although           
          petitioner enjoys photography, we do not believe that he was                
          providing bookkeeping and photography services to PSI for                   
          amusement, nor do we believe that personal gratification was                
          petitioner’s primary motivation for producing multiple                      
          photography exhibitions each year.                                          
               On balance, we believe that the factors described above                
          outweigh other factors that admittedly suggest the absence of a             
          profit motive.  Chief among these contrary factors is JJT’s long            
          history of losses during the 11 years preceding the years in                
          issue, when the only source of revenues for JJT was the billings            
          for its services to PSI--a factor given greater saliency by                 
          petitioner’s family and personal ties to PSI.5   As previously              
          discussed, however, by 1993--the first year in issue--petitioner            

               5 Respondent has not explicitly argued that JJT’s dealings             
          with PSI were not at arm’s length.  On brief, respondent alludes            
          to a “degree of suspicion” that PSI’s payments to petitioner were           
          merely gifts but seemingly overcomes this suspicion two sentences           
          later, stating:  “It is not disputed that the Petitioner was                
          hired to perform accounting, computer, and ‘imaging’ services for           
          PSI.”                                                                       





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