An individual was not operating her music club for profit and, therefore, could not deduct losses associated with it. The taxpayer had no expertise in club ownership, maintained inadequate records and disregarded expert business advice. Moreover, the taxpayer casually accepted the club’s perpetual losses and made no attempt to reduce expenses, increase revenue or improve the club’s overall performance. Further, although the taxpayer earnestly devoted time and energy to her club, she was primarily motivated by personal pleasure and used the club’s losses to offset her trust and capital gain income. Owning the club allowed the taxpayer to further the careers of emerging songwriters, offered her weekly opportunities to interact with country music fans and satisfied her love for promoting country music.
In addition, the taxpayer’s argument, that the Tax Court erred when it failed to act sua sponte and grant her a continuance at a calendar call, was rejected. The taxpayer had failed to raise it in post-trial briefing to the Tax Court, for which she had counsel and, therefore, was precluded from making this argument on appeal.
Unpublished opinion affirming the Tax Court 115 TCM 1027, Dec. 61,111(M), TC Memo. 2018-8.
J. Ford, CA-6
Code Sec. 183
CCH Reference – 2018FED ¶12,177.585
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CCH Reference – TRC BUSEXP: 15,150