Wednesday, April 19, 2006
In Kanofsky v. Commissioner, T.C. Memo. 2006-79 (4/18/06), the Tax Court sustained the Service's disallowance of business deductions claimed by Alvin S. Kanofsky, a full-time physics professor at Lehigh University:
For each year in issue, petitioner filed a Form 1040, U.S. Individual Income Tax Return, showing zero taxable income and no tax due. On a Schedule C attached to each of those returns, petitioner listed as his principal business or profession "research and development" and as the name of his business "A.S.K. Enterprises". Only the 1999 and 2000 Schedules C listed a business address, which was 30 E. 3d St., Bethlehem, PA 18015 (the Bethlehem property). All of the Schedules C report zero gross receipts and zero gross income, and they report the following amounts of total expenses (and resulting losses):
Year Schedule C Expenses
Neither petitioner's exhibits nor his testimony is sufficient to establish that he was engaged in a trade or business during the 1996- 98 period. Moreover, petitioner's 1996 98 Schedules C reporting zero gross receipts from A.S.K. Enterprises support a finding that he was not engaged in any trade or business during that period....
Petitioner's evidence of business use for his three properties is no more convincing for 1999 and 2000 than it is for 1996-98.