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Sales are businesses.2 The parties disagree on whether Field
Investment Management is a business and whether the associated
expenses are ordinary and necessary.
The Court finds, after a review of the record, that
petitioner’s activities with respect to Field Investment
Management amount to personal investment management and not a
trade or business. Petitioner was employed full time as a
mechanical engineer. He did not have a written business plan for
his alleged investment advisory service. In his credit card
accounts, petitioner did not segregate his personal expenses from
his business expenses. Although petitioner had been involved in
his investment activity for 40 years, petitioner had not earned
any income from the investment activity prior to 2001. Thus,
Field Investment Management had no income for the year 2000.
Petitioner further testified that he did not have any
clients for whom he invested or managed money. All investment
accounts were held in his name. During 2000, he had never
charged any person a commission or fee for his alleged investment
advisory service. Petitioner conceded that the totality of the
commissions and fees claimed as expenses on his Schedule C were
related to his own personal investment activities.
2Although petitioner listed “Richard L. Field, Ph.D.,
Consulting Engineer” on Schedule C, he correctly reported the
wages from his employer, Lockheed Martin Corporation, on line 7
of his return. Petitioner did not argue that any of the expense
deductions claimed on Schedule C were related to his employment.
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Last modified: May 25, 2011