Michael D. and Suzan L. Storer - Page 20

                                       - 19 -                                         
          “perform many, menial chores” and “has had to do many forms of              
          marketing including cold calls that can be unpleasant at times.”            
          While petitioners claim that they should not be required to                 
          suffer as “a prerequisite to deductibility,” we cannot help                 
          wondering how petitioners engaged in their activity with a profit           
          objective if they were opposed to performing the tasks essential            
          to business success; namely, marketing and sales calls.                     
               Finally, although we concede that on its face, petitioners’            
          photography activity did have some of the characteristics of a              
          business, we find these characteristics insufficient to                     
          demonstrate that their activity was carried on for profit.                  
               Therefore, on the basis of all of the evidence in the                  
          record, we conclude and hold that petitioners did not conduct               
          their photography-related activity in either 2000 or 2001 with a            
          profit objective within the meaning of section 183.  Accordingly,           
          petitioners are not entitled to the deductions claimed on their             
          Schedules C for the years in issue.                                         
          Section 6662(a) Penalty                                                     
               Respondent determined that petitioners are liable for the              
          accuracy-related penalty provided by section 6662(a) for each               
          year in issue.  Section 6662(a) imposes a 20-percent penalty on             
          the portion of an underpayment of tax that is attributable to,              
          inter alia, negligence or disregard of rules or regulations.  The           
          term “negligence” includes any failure to make a reasonable                 

Page:  Previous  8  9  10  11  12  13  14  15  16  17  18  19  20  21  22  Next 

Last modified: November 10, 2007