Raymond J. Davis - Page 6

                                        - 5 -                                         
          taxpayer must show that during the hiatus he intended to resume             
          the same trade or business.  Gallo v. Commissioner, T.C. Memo.              
          1998-100.                                                                   
               Petitioner testified that upon his retirement he intended to           
          resume his insurance business as soon as he could.  When                    
          questioned as to his state of mind after the sixth, seventh or              
          eighth year of retirement, petitioner replied that he was still             
          too ill to return to work but was "hopeful" that he could return            
          eventually.  In reply to the question as to his state of mind               
          after the 10th or 11th year of retirement, petitioner testified             
          that he still held out "hope", but he admitted that he "was                 
          wondering about it".                                                        
               The cases apply the hiatus principle to "temporary"                    
          cessations of business.  When, however, the cessation is                    
          prolonged, with no continuing connection with the trade or                  
          business or intent to actively carry on the trade or business,              
          the taxpayer is not "carrying on" his trade or business while on            
          "hiatus".  See Estate of Rockefeller v. Commissioner, 762 F.2d              
          264, 270-271 (2d Cir. 1985), affg. 83 T.C. 368 (1984); Canter v.            
          United States, 173 Ct. Cl. 723, 354 F.2d 352 (1965) (4 years is             
          not "temporary"); Corbett v. Commissioner, 55 T.C. 884 (1971).              
               The Court finds petitioner to have been an exceptionally               
          conscientious insurance agent and genuinely loyal to his former             
          clients.  But that does not mean that he was "carrying on" a                






Page:  Previous  1  2  3  4  5  6  7  Next

Last modified: May 25, 2011