- 6 -
It is dubious at best to say that petitioner’s participation
in this pyramid scheme was conducted with the continuity and
regularity of a trade or business, and that the claimed expenses
were ordinary and necessary for the production of income. His
Renaissance activities did not go beyond attending a meeting once
a month and holding a meeting once every 2 weeks at his home.
There is nothing in the record that provides a connection between
the deductions claimed and a trade or business.
But, even if the Renaissance activity was a trade or
business, petitioners face other problems. First, many of
petitioner’s claimed business expenses included family medical
bills, clothing, and home mortgage interest.8 “It is a
fundamental policy of Federal income tax law that a taxpayer
should not be entitled to a deduction for ‘personal’ expenses,
such as the ordinary expenses of everyday living.” Dobra v.
Commissioner, 111 T.C. 339, 348 (1998); see sec. 262(a). The
introductory materials of Renaissance’s The Tax Relief System
blatantly state that the taxpayer can convert “former ordinary
home expenses into substantial business tax deductions
immediately.”9
8 Deductions for home mortgage interest were allowed as
itemized deductions on Schedule A, Itemized Deductions.
9 In Rev. Rul. 2004-32, 2004-12 I.R.B. 621, the Internal
Revenue Service addressed home-based business schemes similar to
Renaissance:
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