James J. Hogan - Page 10




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          2(b)(1), Income Tax Regs.                                                   
               Petitioner maintained a separate bank account for the                  
          Camelot Inn.  Petitioner had some books and records of his                  
          activity.  Petitioner filed a “Business Certificate” with the               
          Cattaraugus County Clerk to certify that he was doing business as           
          the Camelot Inn.  While the maintenance of accurate records is              
          necessary for the purpose of substantiating deductions, record              
          keeping alone is not enough.                                                
               Petitioner also provided a document titled “The Camelot Inn            
          Bed and Breakfast Business Plan”.  This is not a business plan.             
          This is more accurately titled on the second page as a “History             
          and Description of the Business”.  Petitioner’s so-called                   
          “business plan” established no business goals for the Camelot               
          Inn.  Petitioner did not keep the type of records which could be            
          used to increase the profitability of a business.  Petitioner               
          never prepared budgets or market projections which would outline            
          strategies for ensuring a profitable business venture and making            
          informed business decisions on a periodic basis.  Such lack of              
          information upon which to make educated business decisions tends            
          to belie a taxpayer's contentions that an activity was pursued              
          with the primary objective of making a profit.  Dodge v.                    
          Commissioner, T.C. Memo. 1998-89, affd. without published opinion           
          188 F.3d 507 (6th Cir. 1999).                                               
               Petitioner never ascertained how or when he would make a               
          profit or how he could change his operating methods to improve              






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Last modified: May 25, 2011