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Cafe”.2 The concept involved a retail food and drink
establishment that served coffee and related items during the
day, and wine and related items at night. Petitioner and his
wife attempted to take a “two-pronged” approach to generating
income from the Tasha’s Cafe concept. The first “prong” was to
open a retail location in which petitioner and his wife could
operate an actual wine and coffee bar. The second “prong” was to
sell the concept to entrepreneurs as a franchise.
Petitioner outfitted the basement of his home in the style
of the proposed coffee and wine bar to determine the appearance
and operation of Tasha’s Cafe and to model the concept for
potential investors, local businesspeople, and franchisees. In
his basement, petitioner installed restaurant-level food service
equipment, coffee- and wine-related artwork, and two different
types of flooring for testing purposes. Petitioner brought
between 200 and 250 people to his basement model to promote the
retail coffee and wine bar aspect of his business. Petitioner
brought approximately 30 potential franchise customers to his
basement to demonstrate the franchise possibilities of Tasha’s
Cafe. While petitioner demonstrated the Tasha’s Cafe concept, he
served coffee, wine, and food. Petitioner was never paid for the
2 For 2001, petitioner filed Form 1040, U.S. Individual
Income Tax Return, with a filing status of single. For 2002,
petitioner filed Form 1040, with a filing status of head of
household.
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Last modified: November 10, 2007