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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