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Act II. Discussion
A. Did Petitioner Carry on His Playwriting With a Profit
Motive?
Respondent noted in his pretrial memorandum that petitioner
is aggressive in claiming deductions:
Year Sch. C Receipts Sch. C Expenses
1993 $ 0.00 $ 27,924.00
1996 0.00 23,353.00
1997 0.00 24,703.00
1998 0.00 33,093.00
1999 0.00 27,128.00
Petitioner argues that this is nothing more than a
consequence of the long time it takes many artists to realize a
return on their investment of time and money. He contends that
he has consistently intended to profit from his playwriting. At
trial he offered evidence of various rewards he has already
received, including cash bonuses, an increase in salary, travel
opportunities, and professional recognition. He maintains that
he expects to achieve even more dramatic success, and he was
sincerely buoyed in his hopes by many now-famous artists who
achieved renown posthumously.13
Respondent, noting that the deductions seem to offset most
13 Petitioner also suggested that the deductions at issue
were unreimbursed employee expenses, but he did not fully develop
this argument at trial. Those expenses we identify as deductible
we allow as playwriting expenses.
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