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the taxpayer was engaged in a trade or business with regard to
his photographic endeavor, but remanded the case to the trial
court to resolve the questions of whether the taxpayer was
primarily motivated by his love of photography as a hobby or by a
good faith expectation of profit and whether the taxpayer devoted
enough time over a substantial period to be engaged in a trade or
business. Id. at 1364. The District Court was warned on remand
that the mere fact that a taxpayer author has not yet produced a
book does not necessitate the conclusion that he is not engaged
in a trade or business. Id. at 1363.
The Court of Appeals for the Tenth Circuit in Snyder
emphasized that a taxpayer must both possess a good faith profit-
making purpose and spend a substantial amount of time over a
significant period engaged in the activity in order for that
activity to be considered a trade or business. Id. at 1364. For
the reasons stated above, including the minimal time and effort
disclosed in the record, we conclude that petitioner was not
engaged in a trade or business with regard to his recording
activity.
Respondent also determined an addition to tax for late
filing pursuant to section 6651(a)(1) because petitioner did not
file his 1996 return until January 8, 2004. There is no evidence
that petitioner applied for an extension of time to file his
return.
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Last modified: November 10, 2007