1 Unless otherwise indicated, all section references are to

the Internal Revenue Code in effect for the year at issue. All

Rule references are to the Tax Court Rules of Practice and

Procedure.

T.C. Memo. 1998-217

UNITED STATES TAX COURT

ST. ELMO H. NAUMAN, JR., Petitioner v.

COMMISSIONER OF INTERNAL REVENUE, Respondent

Docket No. 10661-96. Filed June 22, 1998.

St. Elmo H. Nauman, Jr., pro se.

Michael H. Salama, for respondent.

MEMORANDUM FINDINGS OF FACT AND OPINION

NAMEROFF, Special Trial Judge: This case was heard pursuant

to the provisions of section 7443A(b)(3)1 and Rules 180, 181, and

182. Respondent determined a deficiency in petitioner’s 1993
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Federal income tax in the amount of $4,256 and an addition to tax

of $400 pursuant to section 6651(a)(1).

The issues for decision are: (1) Whether petitioner was

engaged in a trade or business during 1993; if so (2) whether

petitioner substantiated certain expenses relating to the trade

or business; and (3) whether petitioner is liable for the

delinquency addition to tax.

FINDINGS OF FACT

Some of the facts have been stipulated, and they are so

found. The stipulation of facts and the attached exhibits are

incorporated herein by this reference. At the time he filed his

petition, petitioner resided in El Toro, California.

During 1993, petitioner worked for the Immigration and

Naturalization Service (INS) in the asylum office as one who

interviewed refugees who come to the United States. Petitioner

also worked as a part-time professor at Chapman University

(Chapman) teaching classes in philosophy and religion and as a

chaplain for the United States Navy (the Navy), lecturing and

performing religious services. Petitioner is an ordained

minister of the United Church of Christ and has been for the past

40 years.

Before 1993 and over the course of his career, petitioner

worked in many different capacities, including working as a

professor at different colleges and universities, working on
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2 The titles of these books are The New Dictionary of

Existentialism, Dictionary of American Philosophy, and Exorcism

Through the Ages.

various assignments for the Navy several times per year, and

working for a publishing company developing manuscripts for

publication.

Petitioner is also a published author. Between 1971 and

1983, petitioner published at least three reference books.2

Petitioner received about $1,000 for his work on his last book in

1983. Since then, petitioner has written manuscripts on

philosophy, religion, logic, and politics, but none of them have

been published. Petitioner submitted one manuscript for

publication, but it was not accepted. None of his other

manuscripts were submitted for publication. Petitioner believed

that he had difficulty getting his books published because he was

unable to reestablish a publishing contact, after his previous

contact passed away in 1983 or 1984.

During 1993, in addition to the above activities, petitioner

worked with a company called Professional Foreclosure Services

(PFS) on a project “to acquire real estate for the purpose of

providing a place for people who were recovering alcoholics or

who were battered women”. Petitioner envisioned that he could

raise enough money to purchase real estate and establish a

homeless shelter. Petitioner’s arrangement with PFS was that it

was to purchase and maintain the property and petitioner was to
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provide counseling and other services to the homeless for a fee. 

Petitioner attempted to raise money through mailings and

meetings.

As it turned out, petitioner was unable to raise the money,

and his idea never materialized. Petitioner worked an

unspecified number of Saturdays and Sundays, but he did not

receive compensation for his services.

Petitioner used his car to commute from home to his various

places of employment and other locations. Petitioner submitted a

handwritten mileage log reflecting the dates he drove, where he

drove, and the exact odometer reading at the beginning of each

trip. Petitioner recompiled this log around the time he was

audited, using a spiral calendar and a small notebook in which he

had contemporaneously logged his mileage information. Petitioner

submitted neither the calendar nor the notebook into evidence. 

The log shows that petitioner traveled to his Navy chaplain’s

duties, to bookstores, to church meetings, to his INS office, to

the library, and to PFS’s office. The log indicates that

petitioner drove 20,617 miles during 1993, of which he asserts

that 12,157 (about 59 percent) were business use miles.

Petitioner submitted a “Library List” and photographs that

reflect a sample of the 6,000 books that he purportedly has in

his personal library. These books, purchased over the past 20

years, are on the topics of philosophy, theology, religion, and
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general information and allegedly were used for lecturing

purposes.

Petitioner worked about 40 hours per week for the INS, 10

hours per week teaching at Chapman, 5 hours per week on other

lecturing activity, and an undeterminable amount of time on his

real estate project. Petitioner wrote during his remaining free

time. Other than the spiral calendar and small notebook

previously mentioned, petitioner did not maintain books or

records for any of his activities.

On his Schedule C for 1993, petitioner listed his principal

business or profession as “Religion” and reported no income from

that activity, but claimed the following expenses: 

 Expenses Amount

Car & truck $4,695 

Depreciation 9,320

Office 851

Travel 266

Meals 88 

 Total 15,220

Petitioner’s car and truck expense deduction is based on the

mileage driven for commuting from home to the various places

listed in the log. Petitioner’s depreciation deduction is for

“Professional books and equipment”, of which $8,000 relates to

depreciation on 6,400 books with a purported $160,000 purchase

price and $1,320 relates to depreciation on various office

equipment, such as desks, bookcases, filing cabinets, furniture,
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3 Petitioner received the following Form W-2 wage income:

 Entity Amount

Department of Justice (INS) $42,588.92

Defense Finance and Accounting Service 7,126.44

Chapman University 3,000.00

Persupp Det Camp Pendleton 1,792.52

and computers. Petitioner’s travel and meal deductions are for

the cost of overnight meals and lodging while he performed work

for the Navy. In addition, petitioner reported wage income of

$54,5073 and nontaxable pension income of $4,627. Petitioner

claimed a $3,700 standard deduction. 

Petitioner filed his 1993 Federal tax return on June 13,

1994. Petitioner testified that he did not file his return on

time because he was busy working extra hours for the INS during

an immigration crisis. Petitioner did not file a Form 4868 with

the Internal Revenue Service, requesting an automatic extension

to file his return.

In the notice of deficiency, respondent disallowed all of

the expenses. Respondent has conceded that petitioner has

verified expenditures for office, travel, and meal expenses. 

Respondent, however, asserts that deductions relating to

“Professional books and equipment” and the business use of the

automobile have not been substantiated. Respondent also

determined that petitioner is liable for the section 6651(a)

addition to tax.
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OPINION

Section 162(a) allows a deduction for all ordinary and

necessary expenses paid or incurred during the taxable year in

carrying on any trade or business. To be engaged in a trade or

business within the meaning of section 162, “the taxpayer must be

involved in the activity with continuity and regularity and * * *

the taxpayer’s primary purpose for engaging in the activity must

be for income or profit.” Commissioner v. Groetzinger, 480 U.S.

23, 35 (1987).

Petitioner asserts that, during 1993, he was engaged in the

trade or business of writing on the topics of religion and

philosophy, of working towards creating a homeless shelter,

and/or of being a lecturer/teacher. Respondent asserts that

petitioner was not engaged in any such business activities during

1993 except as an employee, and that he was writing for “mere

personal enjoyment”. We agree with respondent.

With respect to petitioner’s lecturing/teaching activities,

the only remuneration received by him was Form W-2 wage income

from the INS, Chapman University, and the Navy. We find that

petitioner did not perform teaching or lecturing activity

separate and apart from this employment. Clearly, petitioner is

not entitled to Schedule C deductions for expenses relating to

wage income. It is possible that petitioner is entitled to a

Schedule A employee business expense deduction for overnight
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4 We note that petitioner is not entitled to the claimed

miles, as they represent travel between petitioner’s home and

places of employment. The cost of commuting to work, regardless

of distance traveled, is a nondeductible personal expense. Heuer

v. Commissioner, 32 T.C. 947 (1959), affd. per curiam 283 F.2d

865 (5th Cir. 1960). 

lodging and meals expenditures, but he has already claimed a

$3,700 standard deduction, and any resulting itemized deduction,

after taking into consideration the 2-percent floor of section

67, would not exceed that amount.4

With respect to petitioner’s homeless shelter activity, we

conclude that, during 1993, petitioner was not engaged in that

activity with sufficient continuity and regularity for us to find

that he was carrying on a trade or business. In short,

petitioner had a business idea that never materialized. 

Petitioner did not receive any compensation or income for his

efforts. In fact, petitioner did not even demonstrate a source

from which he could possibly be compensated. We find it unlikely

that those persons in need of a homeless shelter would have funds

to pay for his counseling service. 

With respect to petitioner’s writing activity, in order for

him to deduct expenses of an activity pursuant to section 162, he

must prove that profit was the primary or dominant purpose for

engaging in the activity. Wolf v. Commissioner, 4 F.3d 709, 713

(9th Cir. 1993), affg. T.C. Memo. 1991-212; Polakof v.

Commissioner, 820 F.2d 321 (9th Cir. 1987), affg. per curiam T.C.
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Memo. 1985-197; Independent Elec. Supply, Inc. v. Commissioner,

781 F.2d 724, 726 (9th Cir. 1986), affg. Lahr v. Commissioner,

T.C. Memo. 1984-472; Carter v. Commissioner, 645 F.2d 784, 786

(9th Cir. 1981), affg. T.C. Memo. 1978-202; Hirsch v.

Commissioner, 315 F.2d 731, 736 (9th Cir. 1963), affg. T.C. Memo.

1961-256; see also Snyder v. United States, 674 F.2d 1359 (10th

Cir. 1982). Whether petitioner had the requisite profit

objective is a question of fact to be resolved from all relevant

facts and circumstances. E.g., Drobny v. Commissioner, 86 T.C.

1326, 1341 (1986), affd. 113 F.3d 670 (7th Cir. 1997); sec.

1.183-2(b), Income Tax Regs. Profit in this context means

economic profit independent of tax savings. E.g., Antonides v.

Commissioner, 91 T.C. 686, 694 (1988), affd. 893 F.2d 656 (4th

Cir. 1990). The burden of proving a profit objective rests with

petitioner. Rule 142(a); e.g., Thomas v. Commissioner, 84 T.C.

1244, 1269 (1985), affd. 792 F.2d 1256 (4th Cir. 1986).

Section 1.183-2(b), Income Tax Regs., provides a nonexclusive list of factors we consider to determine whether a

taxpayer engaged in the venture with a profit objective. They

include: (1) The manner in which the taxpayer carried on the

activity; (2) the expertise of the taxpayer or his advisers; (3)

the time and effort expended by the taxpayer in carrying on the

activity; (4) the expectation that the assets used in the

activity may appreciate in value; (5) the success of the taxpayer
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in carrying on other similar or dissimilar activities; (6) the

taxpayer’s history of income or loss with respect to the

activity; (7) the amount of occasional profits that are earned;

(8) the financial status of the taxpayer; and (9) whether

elements of personal pleasure or recreation are involved. No

single factor is controlling, and we do not reach our decision by

merely counting the factors that support each party’s position. 

Dunn v. Commissioner, 70 T.C. 715, 720 (1978), affd. 615 F.2d 578

(2d Cir. 1980); sec. 1.183-2(b), Income Tax Regs. Certain

elements are given more weight than others because they are more

meaningfully applied to the facts in our case.

Upon reviewing the record, we conclude that, during 1993,

petitioner did not engage in the writing activity with the

requisite profit objective. Petitioner did not carry on this

activity in a businesslike manner, as he did not maintain any

books and records. See sec. 1.183-2(b)(1), Income Tax Regs. 

Moreover, since 1983, petitioner submitted only one manuscript

for publication and earned no income from his writing activity. 

In addition, petitioner did not demonstrate that he changed his

operation to improve profitability, had a business plan, or

investigated the basic factors that affect profitability. 

Lastly, petitioner had sufficient income from his INS,

Chapman, and Navy work to use the claimed tax benefits created

from his writing activity. See sec. 1.183-2(b)(8), Income Tax
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Regs. While we do not believe that petitioner’s income was so

high as to make tax savings his primary objective, we recognize

that petitioner may have sought after-tax savings as a way to

subsidize his writing activity. It is obvious that petitioner

enjoyed writing, although the presence of personal enjoyment from

an activity does not, by itself, establish a lack of profit

objective. See sec. 1.183-2(b)(9), Income Tax Regs. 

In sum, “The gratification derived from an occupation worth

doing, possibly beneficial to others and probably requiring long

hours or arduous labor, must still not be confused with an

intention to return a profit.” White v. Commissioner, 23 T.C.

90, 94 (1954), affd. per curiam 227 F.2d 779 (6th Cir. 1955). 

Accordingly, we hold that petitioner is not entitled to

deductions under section 162(a) with respect to any of his

activities. Having held that none of petitioner’s activities is

to be treated as a trade or business apart from his employment,

we need not address the issue of whether petitioner’s expenses

were adequately substantiated.

Addition to Tax

Section 6651(a)(1) imposes an addition to tax of up to 25

percent of the underpayment for failure to file a timely Federal

income tax return unless the taxpayer shows that the failure was

due to reasonable cause and not willful neglect. United States

v. Boyle, 469 U.S. 241, 245 (1985). To prove “reasonable cause”,
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the taxpayer must show that he exercised ordinary business care

and was nevertheless unable to file the return within the

prescribed time. Crocker v. Commissioner, 92 T.C. 899, 913

(1989); sec. 301.6651-1(c)(1), Proced. & Admin. Regs.

Petitioner asserts that his unusually busy work schedule

around the time his return was due created reasonable cause for

filing his tax return about 2 months late. We disagree. The

fact that petitioner was busy with employment or other activities

is not reasonable cause for failure to timely file a return. 

Dustin v. Commissioner, 467 F.2d 47, 50 (9th Cir. 1972), affg. 53

T.C. 491 (1969). Moreover, petitioner’s assertion does not

explain why he did not request an automatic extension for filing

his return. Accordingly, we sustain respondent on this issue.

To reflect the foregoing, 

Decision will be entered

for respondent.