N. Joseph Calarco - Page 9

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          who had not yet achieved profitability, but nevertheless                    
          maintained a studio and gallery and participated in shows.  We              
          recognized then that economic success in the world of fine art              
          frequently takes longer to achieve than success in other fields.            
          The same is true of literature.  Id. at 701-702.  In Vitale v.              
          Commissioner, T.C. Memo. 1999-131, affd. 217 F.3d 843 (4th Cir.             
          2000), we allowed the taxpayer to deduct many of his expenses of            
          researching a book, despite the fact that he had not yet achieved           
          profitability as an author.  Petitioner’s activity is reminiscent           
          of Vitale’s--he has likewise engaged in extensive research,                 
          generated large losses, and claimed his intent was ultimately to            
          achieve a profit.                                                           
               With this special lens in place, we look at each of the                
          factors listed in the relevant regulation.  The first is whether            
          the activity was run in a businesslike way.  Sec. 1.183-2(b)(1),            
          Income Tax Regs.  In Churchman, we listed six reasons for finding           
          that her activity was: (1) she designed an art gallery and                  
          maintained it for a year; (2) she kept a mailing list to announce           
          her shows; (3) she traveled to out-of-town locations to show her            
          art; (4) she had published a book; (5) in the face of poor sales,           
          she tried to change her material to meet public demand; and (6)             
          she had kept records of her sales and expenses, albeit not                  
          complete books and records.                                                 
               Professor Calarco has shown similar indications of business-           






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