T .C . Summary Opinion 2010-3 7

T .C . Summary Opinion 2010-3 7

UNITED STATES TAX COUR T

PAUL AND MELODY FUCALORO, Petitioners v .

COMMISSIONER OF INTERNAL REVENUE, Responden t

Docket No . 1082-095 .

Paul and Melody Fucaloro,

Filed March 30, 2010 .

pro sese .

Diana P . Hinton , for respondent .

CHIECHI,

Judge : This case was heard pursuant to the provi-

sions of section 7463

of the Internal Revenue Code in effect when

the petition was filed .' Pursuant to section 7463(b), the decision to be entered is not reviewable by any other court, and this

opinion shall not be treated as precedent for any other case .

L

'Hereinafter, . all section references are to the Internal

Revenue Code (Code) in effect for the year at issue . All Rule

references are to the Tax Court Rules of Practice and Procedure .

SERVED MR 3 0 2010

2

Respondent determined a deficiency of $18,020 in petitioners' Federal income tax for their taxable year 2005 . The issue

remaining for decision is whether petitioners are entitled for

their taxable year 2005 to a claimed business loss of $57,741 .2

We hold that they are not .

Background 3

Some of the facts have been stipulated and are so found .

Petitioners resided in New York at the time they filed the

petition in this case .

During 2005, petitioner Paul Fucaloro (Mr . Fucaloro) was not

licensed as a sport agent . During that year, he executed each of

two separate agreements entitled "MANAGEMENT AGREEMENT" . One of

those agreements pertained to Kertson Manswell (Mr . Manswell),

who was identified in that agreement as "Boxer", and the other

pertained to Bermane Stiverne (Mr . Stiverne), who was identified

in that agreement as "Boxer" . The agreement involving Mr .

Manswell was effective as of March 5, 2005, and the agreemen t

2Respondent made other determinations in the notice of

deficiency that respondent issued to petitioners for their

taxable year 2005 (2005 notice) . Resolution of those other

determinations flows from our resolution of the issue presente d

here .

3As directed by the Court, petitioners and respondent filed

respective opening briefs . Petitioners' opening brief contains

certain statements that are not supported by reliable evidence in

the record in this case and has certain attachments that are not

part of that record . We shall disregard those statements and

attachments . See Rule 143(c) .

3 _

involving Mr . Stiverne was effective as of May 20, 2005 . Except

for the identity of the so-called boxer, the effective date, and

the rate of compensation for the services to be performed, each

of the two agreements that Mr . Fucaloro executed during 200 5

contained essentially the same provisions as follows :

This Management Agreement (the "Agreement") is

entered effective as of March 5, 2005 [in the case of

Mr . Manswell and May 20, 2005, in the case of Mr .

Stiverne] by and among Cameron Mitchell Dunkin, D & D

Boxing, Inc . ("Duncan") * * * Las Vegas, Nevada * * *

or nominee, and Paul Ficaro[41 (hereinafter referred to

as "Manager") and Kertson Manswell [in the case of the

management agreement effective as of March 5, 2005, and

Bermane Stiverne in the case of the management agreement effective as of May 20, 2005] (hereinafter referred to as "Boxer") .

RECITAL S

A . Boxer desires to become duly qualified

and licensed as a professional boxer

with, among others, the Nevada State

Athletic Commission (the "Boxing Commission") . The Boxer hereby engages

the Manager, and the Manager agree for

a period of Five (5) years from the

date of Boxers next professional bout

(the "Initial Term") .

B . Manager is duly qualified to manage,

advise and consult with professional

boxers in furthering thei r

professional boxing career .

4Although the agreement pertaining to Mr . Manswell stated

that the agreement is among Cameron Mitchell Dunkin, D & D

Boxing, Inc ., "Paul Ficaro", and Mr . Manswell, the signature that

appeared over the typewritten name "Paul Ficaro" was Paul

Fucaloro . The record does not explain the use of the name "Paul

Ficaro" in the agreement pertaining to Mr . Manswell .

- 4

C . Boxer desires to retain Manager to

perform certain duties in connection

with managing, advising and consulting

Boxer in his professional boxing career and Manager desires to undertake

such representation on behalf of

Boxer .

NOW, THEREFORE, the parties agree as follows :

1 .

MANAGEMENT RELATIONSHI P

(a) During the Term of this Agreement, Boxer hereby engages Manager as Boxer's

exclusive manager and advisor to render the

services set forth in this Agreement and

Manager agrees to act in such capacity on

behalf of Boxer . Accordingly, Boxer agrees

that, Boxer will not engage any other representative or agent to render similar services

on behalf of Boxer and all matters pertaining

to Boxer's professional boxing career will

not be effectuated without Manager's prior

consent . Boxer and Manager shall execute and

file state management agreements with the

Boxing Commission of the applicable jurisdictions, including the Nevada State Athletic

Commission . Manager will consult, negotiate

terms and contract(s) with boxing promoters

in connection with boxing contests and/or

exhibitions . Manager will represent . Boxer

and act as his negotiator to fix and agree

upon the terms governing all manner of disposition, use, employment and exploitation of

Boxer's services, talents and the products

thereof . Boxer agrees that Manager will

represent in . connection with Boxer's participation in professional boxing contests and

exhibitions, the Boxer's exploitation and

professional use of his talents, personality,

name and likeness in every manner whatsoever .

throughout the world .

(b) Boxer recognizes that Manager may

perform similar duties for other professional

boxers (including boxers in the same weight

division as Boxer) and otherwise engage and

pursue other business endeavors .

- 5

(c) Boxer is not under any disability ; restriction or prohibition, either contractual or otherwise, with respect t o

Boxer's right to execute this Agreement and

to fully perform consistent with its terms

and conditions .

(d) Boxer has the right, power and

authority to do business hereunder, and Manager's activities on Boxer's behalf under

this Agreement will not infringe upon, violate or interfere with the rights, whether

statutory, contractual or otherwise, of any

third party .

(e) Boxer shall diligently devote

himself to his professional boxing career and

do all things necessary and appropriate to

promote his career and generate earnings

therefrom . Boxer agrees to participate in

all training necessary to compete as a . world

class professional boxer .

2 .

DUTIES OF-MANAGE R

Manager, . in conjunction with Boxer's promoter, shall provide such advice, guidance, direction and services to further the professional

boxing career of Boxer including, but not limited

to, the following :

(a) Manager shall coordinate with

Boxer's promoter in selecting opponents for

all professional boxing matches in which

Boxer is a participant ; provided, however,

that Manager shall consult with Boxer prior

to the final selection of an opponent .

(b) Manager shall negotiate the terms

and conditions of all professional boxing

matches most favorable to Boxer, including

all matters involving global television

broadcasts, sponsorship and endorsement matters and ancillary issues inherent in the

financial aspects of Boxer's professional

boxing career .

- 6 (c) Manager shall coordinate with

Boxer's promoter the dates, times and sites

of all publicity, promotional and public,

relations activities as well as the dates,

times and sites of all professional boxing

matches to be engaged by Boxer .

(d) Manager shall coordinate the

training activities of Boxer . Boxer shal l

.select the Trainer, with input from Manager .

(e) Manager shall, to the best of his

ability, perform services for and on behalf

of Boxer as contemplated under this Agreement

and shall perform such other duties and responsibilities as he deems appropriate in

connection with the Boxer's professional

boxing career .

(f) Manager agrees that he will

promptly and faithfully comply with the applicable rules of the Boxing Commission, the

Muhammad Ali Boxing Reform Act and any other

required governing authority with regard to

the management services contemplated to be

rendered hereunder .

3 .

TER M

(a) The initial term of this Agreement shall commence on March 5, 2005 [in the

case of Mr . Manswell and May 20, 2005, in the

case of Mr . Stiverne] and continue for a

period of five (5) years from the date of

Boxers next professional bout (the "Initial

Term") . Notwithstanding the foregoing, Manager shall have the option to extend-the

Initial Term of this Agreement for an additional two (2) years (i .e ., through March 4,

2012 [in the case of Mr . Manswell and May 19,

2012 in the case of Mr . Stiverne]) or for the

maximum term permitted by applicable law in

the event that, during the Initial Term,

Boxer is ranked in the top twenty (20) of the

World Boxing Association, World Boxing Coun

cil, International Boxing Federation, International Boxing Association or World Boxing

Organization at the time of the expiration of

- .7 the Initial Term . The Initial Term and the

two (2) year extension of the Initial Term,

if applicable, are referred to collectively

as the "Term" .

(b) In the event, the Boxer or Opponent suffers an injury which results in his

inability to participate in boxing contests

and/or exhibitions, the Initial Term and/or

the renewal Term of this . Agreement (as appropriate) shall automatically be extended by

Boxers or Opponents disability .

4 .

FINANCIAL CONSIDERATION S

Boxer hereby agrees .and obligates

himself to pay to the Manager Cameron Dunkin,

D & D Boxing, Inc . or nominee (11% [in the

case of Mr . Manswell, and 23 1/3% in the case

of Mr . Stiverne]) and Paul Ficaro (22 1/3%

[in the case of Mr . Manswell and 10% in the

case of Mr . Stiverne]) and Manager agrees to

accept as full compensation for the services

he shall render pursuant to section 2, a

total of Thirty-three and one-third .percent

(33 1/3%), of all boxing compensation .

Boxer will instruct promoter to pay to the

Manager his share of the purse at the time he

pays Boxer . Boxer shall execute all documentsrequired by the Boxing Commission to

remit such fees directly to Manager . For

purposes of this Agreement, Boxing Compensation means the cumulative amount of purse

income to be received by Boxer in connection

with professional boxing matches/exhibitions

which includes, where applicable, purse

.amounts, purse advances, share of live gate

revenues, television revenues, license fees,

cable revenues, pay-per-view revenues, sponsorship, and all other revenues directly

related and received in connection with the

professional boxing career of, Boxer .

5.

BREACH BY BOXE R

(a) Boxer hereby acknowledges and

agrees that the services as set forth in this

agreement as rendered by him are of special,

- 8 unusual and extraordinary character, giving

them particular value, the loss of which

could not reasonably and adequately be measured in or compensated by damages in an

action at law . Boxer therefore agrees that

the Manager shall be entitled to injunctive

and other equitable relief to prevent any

material breach of default by Boxer hereunder, which shall be in addition to and without prejudice to any and all other rights and

remedies which the Manager may have . Manager's right to represent Boxer as Boxer's

sole and exclusive boxing manager and advisor

(with the exception of Boxer's attorney) and

Boxer's obligation to use Manager exclusively

in such capacity are unique and extraordinary

rights and that any breach or threatened

breach by Boxer under this Agreement shall be

material and shall cause Manager immediate

and potentially irreparable damages which

cannot be adequately compensated for solely

by money judgement . Accordingly, Boxer

agrees that, in addition to all other forms

of relief and all other remedies which may be

available to Manager in the event of any such

breach or threatened breach by Boxer, Manager

shall be entitled to seek and obtain injunctive relief against Boxer .

(b) During the Term of this agreement

and any extension thereof, Boxer agrees to

render services solely and exclusively for

the Manager and agrees that he will not take

part in any professional boxing contests

and/or exhibitions without Managers written

approval .

(c) Boxer shall and agrees to indemnify and hold the Manager harmless against

and from any and all claims, damages, liabilities, costs and expenses, including without

limitation reasonable attorney's fees, arising out of the exercise by the Manager of any

rights granted herein, out of any breach by

Boxer or any representation, warranty or

other provision herein, or out of any wrongful act or omission by Boxer/Athlete .

- 9 *

13 .

*

*

*

ALTERATION AND AMENDMENT :INTEGRATIO N

(a) This Agreement sets forth the

entire understanding between the, parties

relating to the relationship of Manager and

Boxer . No change or modification to this

Agreement shall be valid unless . the same is

in writing and signed by the parties to this

Agreement .. No waiver of any provision of

this Agreement shall be valid unless in writing and signed by the person against whom it

is sought . to be enforced .

(b) If any of the terms or provisions

of this Agreement are in conflict with any

applicable statute, rule or law, then such

term or provision shall be deemed inoperative

to the extent that they may conflict wit h

.such statute, rule or law and shall be deemed

to be modified to conform with such statute,

rule or law .

(c) The parties agree to take all

actions necessary to file the necessary management agreements with the applicable state

Boxing Commission .

At no time did Mr . Fucaloro have a separate bank account

with respect to any of his activities relating to boxing (boxing

related activities) . Nor did he at any time maintain a contemporary diary or any books with respect to those, activities .

As of the time of the trial in this case, Mr . Fucaloro had

been involved in certain boxing-related activities for at least

20 years and had never made a profit from those activities .

During 2005, Mr . Fucaloro made 13 trips (2005 trips) all but

one of which occurred over a weekend . The 2005 trips consisted

of (1) six trips to Las Vegas, Nevada, (2) two trips to

- 10 Charleston, South Carolina, (3) one trip to Tampa, Florida,

(4) one trip to Montreal, Canada, (5) one trip to Pittsburgh,

Pennsylvania, (6) one trip to Los Angeles, California, and

(7) one trip to Aruba . During the 2005 trips, Mr . Fucaloro

incurred expenses for (1) transportation, including air transportation and ground transportation, (2) hotels, and (3) meals and

beverages (collectively, meals) .

During 2005, Mr . Fucaloro wired through Western Union a

total of $5,350 to Mr . Stiverne . In order to wire that total

amount to Mr . Stiverne, during 2005 Mr . Fucaloro was required t o

pay total service charges to Western Union of $476 .

.

During 2005, Mr . Fucaloro wired through Western Union a

total of $5,200 to Mr . Manswell . In order to wire that total

amount to Mr . Manswell, during 2005 Mr . Fucaloro was required to

pay total service charges to Western Union of $344 .99 .

During-2005, Mr . Fucaloro wired through Western Union (1) a

total of $7,500 to Mark Suarez (Mr . Suarez) and (2) $1,500 to

Cameron Dunkin (Mr . Dunkin) . In order to wire those respective

amounts to Mr . Suarez and Mr . Dunkin, during 2005 Mr . Fucaloro

was required to pay total service charges to Western Union of

$617 .

Petitioners filed Form 1040, U .S . Individual Income Tax

Return, for their taxable year 2005 (2005 return) . In that

return, petitioners reported total wages of $175,643, taxable

- 11 interest of $97, taxable refunds, credits, or offsets of State

and local income taxes of .$1,615, and pensions and annuities of

$73,297 and claimed a business loss from Schedule C, Profit or

Loss From Business (2005 Schedule C), of $57,741 . As a result,

petitioners claimed total income of $192,911 in their 200 5

return .

In the 2005 Schedule C, petitioners showed Mr . Fucaloro as

the name of the proprietor and ."LICENSED SPORT AGENT" as the

"Principal . business . or profession" . In the,2005 Schedule C,

petitioners reported no gross receipts or sales and no gross

income . In the 2005 Schedule C, petitioners claimed $15,803 of

expenses for "Travel", $2,416 of expenses for "Deductible meals

and entertainment", and $39,522 of "Other expensesi5 and claimed

a loss of $57,741 . 6

Respondent issued to petitioners the 2005 notice . In that

notice, respondent disallowed the expenses and the loss of

$57,741 that petitioners claimed in the 2005 Schedule C .

5In the 2005 Schedule C, petitioners' only description of

the "Other expenses" of $39,522 was "RECRUITMENT" .

'As discussed above , petitioners claimed the 2005 Schedule C

loss of $57 , 741-as a business loss that reduced the total income

that they reported in their 2005 return .

12 Discussio n

Petitioners bear the burden of proving that the determinations in the notice are erroneous .' See Rule 142(a) ;

Welch v .

Helvering , 290 U .S . 111, 115 (1933) . Moreover, deductions are a

matter of legislative grace, and petitioners bear the burden o f

proving entitlement to any deduction claimed . See

INDOPCO, Inc .

v . Commissioner , 503 U .S . 79, 84 (1992) . The Code and the

regulations thereunder require petitioners to maintain records

sufficient to establish the amount . of any deduction claimed . See

sec . 6001 ; sec . 1 .6001-1(a), Income Tax Regs .

Before turning to the issue presented, we shall summarize

certain principles applicable to that issue and evaluate certain

evidence on which petitioners rely .

A taxpayer is entitled to deduct all the ordinary and

necessary expenses .paid or incurred during a taxable year in

carrying on a trade or business . Sec . 162(a) .

In order for a taxpayer to be carrying on a trade or business within the meaning of section 162(a), the taxpayer must be

involved in the activity with continuity and regularity .

Commis-

sioner v . Groetzinger , 480 U .S . 23, 35 (1987) . A sporadic

activity will not qualify as carrying on a trade or business fo r

'Petitioners do not claim that the burden of proof shifts to

respondent under sec . 7491(a) . On the record before us, we

conclude that the burden of proof does not shift to respondent

under that section . See id .

13 purposes of section 162(a) .

Id .

The trade or business require-

ment of section 162(a) is not met until the trade or business has

begun to function as a going concern and the activity for which

it is organized is performed .

Jackson v . Commissioner , 86 T .C .

492, 514 (1986), affd . 864 F .2d 1521 (10th Cir . 1989) . In

addition, the taxpayer's primary purpose for carrying on . th e

activity must be for income or .profit .

Commissioner v .

Groetzinger, supra at 35 .

For certain kinds of expenses otherwise deductible . under

section 162(a), a taxpayer must satisfy certain substantiatio n

requirements set forth in section 274(d) before such expenses

will be allowed as deductions . Specifically, in order to deduct

any of the expenses claimed in the 2005 Schedule C for transportation, for hotels, for meals, and for entertainment, petitioners

must establish that those expenses satisfy the requirements of

not only section 162(a) but also section 274(d) . To the extent

that petitioners carry their burden of showing that those expenses claimed in the 2005 Schedule C satisfy the requirements of

section 162(a) but fail to satisfy their burden of showing that

those expenses satisfy the recordkeeping requirements of section

274(d), petitioners will have failed to-carry their burden of

establishing that they are entitled to deduct such expenses,

regardless of any inequities involved . See sec . 274(d) ; sec .

- 14 1 .274-5T(a), .Temporary Income Tax Regs ., 50 Fed . Reg . 46014 (Nov .

6, 1985) .

The recordkeeping requirements of section 274(d) will

preclude petitioners from deducting expenditures otherwise

allowable under section 162(a)(2) for transportation, for hotels ,

for meals, and for entertainment unless they substantiate the .

requisite elements of each such expenditure or use . See sec .

274(d) ; sec . 1 .274-5T(b)(1), Temporary Income Tax Regs ., 50 Fed .

Reg . 46014 (Nov . 6, 1985) . The taxpayer is required to .

substantiate each element of an expenditure or use

* * * by adequate records or by sufficient evidence

corroborating his own statement . Section 274(d) contemplates that a taxpayer will maintain and produce

such substantiation as will constitute proof of each

expenditure or use referred to in section 274 . Written

evidence has considerably more probative value than

oral evidence alone . In addition, the probative value

of written evidence is greater the closer in time it

relates to the expenditure or use . A contemporaneous

log is not required, but a record of the elements of an

expenditure or of a business use of listed property

made at or near the time of the . expenditure or use,

supported by sufficient documentary evidence, has a

high degree of credibility not present with respect to

a statement prepared subsequent thereto when generally

there is a lack of accurate recall . Thus, the corroborative evidence required to support a statement not

made at or near the time of the expenditure or use must

have a high degree of probative value to elevate such

statement and evidence to the level of credibility

reflected by a :record made at or near the time of the

expenditure or use supported by sufficient documentary

evidence . The substantiation requirements of section

274(d) are designed to encourage taxpayers to maintain

.the records, together with documentary evidence, as

provided in paragraph (c)(2) of this section' [1 .274-5T,

Temporary Income Tax Regs .] .

V

15 Sec . 1 .274-5T(c)(1), Temporary Income Tax'Regs ., 50 Fed . Reg .

46016-46017 (Nov . 6, 1985) .

The elements that a taxpayer must prove with respect to an

expenditure for traveling away from home on business, including

t

expenditures for transportation, for hotels, and for meals, are : .

(1) The amount of each such expenditure for traveling away .from

home, except that the daily cost of the traveler's own breakfast,

lunch, and dinner may be aggregated ; (2) the time of each such

expenditure, i .e ., the dates of departure and return for each

trip away from home and the number of days away from home spent

on business ; (3) the place .of each such expenditure, i .e ., the

destination or locality of travel, described by name .of city or

town or other similar designation ; and (4) the business purpose

of each such expenditure, i .e ., the business reason for the

travel or the nature of the business benefit derived or expected

to be .derived as a result of travel . Sec . 1 .274-5T(b)(2),

Temporary Income Tax Regs ., 50 Fed . Reg . 46014-46015 (Nov . 6,

1985) .

The elements-that a taxpayer must prove with respect to an

expenditure for entertainment . are : (1) The amount of each such

expenditure for entertainment, except that incidental items such

as taxi fares or telephone calls may be aggregated on .a daily

basis ; (2) the time of each such expenditure, i .e ., the .date of

the entertainment ; (3) the place of each such expenditure, i .e .,

16 the name, if any, the address or location, and, if not apparent

from the designation of the place, the designation of the type of

entertainment, such as dinner or theater ; (4) the business

purpose of each such expenditure, i .e ., the business reason for

the entertainment or the nature of business benefit derived or

expected to be derived as a result of the entertainment and,

except in the case of business meals described in section

274(e)(1), .the nature of any,business discussion or activity ;8

and (5) the business relationship, i .e ., the occupation or other

information relating to the person or persons entertained,

including name, title, or other designation, sufficient to

establish the business relationship to the taxpayer . See sec .

1 .274-5T(b)(3), Temporary Income Tax Regs ., 50 Fed . Reg . 46015

(Nov . 6, 1985) .

'If a taxpayer claims a deduction for entertainment directly

preceding or following a substantial and bona fide business

discussion on the ground that such entertainment was associated

with the active conduct of the taxpayer's trade or business, the

taxpayer is not required to establish the fourth element se t

,forth above that is otherwise required with respect to a deduction for entertainment . Instead, the taxpayer must establish the

following : (1) The date and the duration of the business discussion ; (2) the place of the business discussion ; (3) the nature of

the business discussion and the business reason for the entertainment or the nature of the business benefit derived or expected to be derived as the result of the entertainment ; an d

(4) the identification of the persons entertained who participated in the business discussion . See sec . 1 .274-5T(b)(4),

Temporary Income Tax Regs ., 50 Fed . Reg . 46015- .46016 (Nov . 6,

1985) .

- 17 In support of their position that they are entitled to the

expenses and the loss of $57,741 that they claimed in the 200 5

.Schedule C, petitioners rely principally on (1) the testimony of

Mr . Fucaloro,

.(2) certain respective receipts (Mr ._ Fucaloro's

receipts)' for air and ground transportation, for hotels, for

meals, for entertainment, and for certain miscellaneous expenditures,10 (3) certain respective schedules of expenses

.(Mr .

Fucaloro's summary schedules) for transportation, for hotels, for

meals, for entertainment, and for certain miscellaneous expendi- .

tures that Mr . Fucaloro prepared in 2009 at the request of an

Appeals officer of respondent, and (4) certain Western Union

receipts showing that during 2005 Mr . Fucaloro wired through

Western Union to Mr . .Stiverne, Mr . Manswell, Mr . Suarez, and Mr .

Dunkin $5,350, $5,200, $7,500, and $1,500, respectively .

As for the testimony of Mr . Fucaloro, we found his testimony

to be in certain material respects general, vague, conclusory,

uncorroborated, and/or self-serving . .

As for Mr . Fucaloro's receipts, none of those receipts

showed the business purpose for each such expense . Nor did Mr .

'Certain of Mr . Fucaloro's receipts contained handwritten

notations that Mr . Fucaloro made thereon in 2009 at the request

of an Appeals officer of respondent .

10Mr . Fucaloro's receipts for miscellaneous expenditures

included receipts for certain furniture, certain men's clothing,

and payments to various individuals whose alleged involvement in

Mr . Fucaloro's boxing-related activities is not established by

reliable evidence in the record .

18 Fucaloro's receipts for claimed entertainment expenses identify

the person(s) who was allegedly entertained and who allegedly

participated in a business discussion . Moreover, some of Mr .

Fucaloro's receipts indicated that .the expenses were for certain

family members of Mr . Fucaloro or related to his corporation,

Farubrik Sports .

As for Mr . Fucaloro's summary schedules, those schedules are

for the most part summaries of Mr . Fucaloro's receipts . None of

those schedules showed the business purpose for each expens e

shown . Nor did Mr . Fucaloro's summary schedules identify in the

case of claimed entertainment expenses the person(s) who was

allegedly entertained and who allegedly participated in a business discussion .

Mr . Fucaloro testified in a general and conclusory manner

that he incurred all the claimed expenses for transportation, for

hotels, for meals, and for entertainment in order to visit

certain unidentified boxers, watch them train, and speak with

certain unidentified trainers of those unidentified boxers to

ascertain whether those boxers were ready for a boxing match and,

if so, the type of match . Mr . Fucaloro did not testify specifically regarding, and did not note on any of Mr . Fucaloro' s

receipts, the business purpose for each of those . expenses . In

the case of Mr . Fucaloro's receipts for claimed entertainment

expenses, Mr . Fucaloro did not testify regarding the person(s)

- 19 who was allegedly entertained . and who allegedly participated in a

business discussion . We . shall not rely on the testimony of Mr .

Fucaloro to establish petitioners' position that they are entitled to deduct the expenses for transportation, for hotels, for

meals, for entertainment, and for certain miscellaneous expenditures that they claimed in the 2005 Schedule C . See, e .g . ,

Tokarski v . Commissioner , 87 T .C . 74, 77 (1986) . Nor shall we

rely,on Mr .

.Fucaloro's receipts and Mr . Fucaloro's summary

schedules to establish that position .

As for Mr . Fucaloro's Western Union receipts showing that

during 2005 he wired certain amounts of money to Mr . Stiverne,

Mr . Manswell, Mr . Suarez, and Mr . Dunkin, Mr . Fucaloro testified

that he was required to provide money to Mr . Stiverne, Mr .

Manswell, and Mr . Suarez whenever any of them asked for money .

That was because, according to Mr . Fucaloro's testimony, if he

had not done so, each of those individuals would have hired

another manager . The respective agreements pertaining to Mr .

Stiverne and Mr . Manswell under which Mr . Fucaloro and another

person were to act as the manager for those individuals make no

mention of a requirement that the manager provide money to or for

Mr . Stiverne and Mr . Manswell whenever they asked for money . In

addition, the record does not establish that during 2005 there

- 20 was any kind of agreement between Mr . Fucaloro and Mr . Suarez .1'

We shall not rely on Mr . Fucaloro's Western Union receipts to

establish petitioners' position that they are entitled to deduct

the respective amounts of money that Mr . Fucaloro wired during

2005 to Mr . Stiverne, Mr . Manswell, Mr . Suarez, and Mr . Dunkin

and that they claimed in the 2005 Schedule C .

On the record before us, we find that petitioners have

failed to carry their burden of establishing that during 2005 Mr .

Fucaloro .engaged in certain boxing-related activities for a

profit .12 See generally sec . 1 .183-2, Income Tax Regs . On that

.record, we further find that petitioners have failed to carr y

.their burden of establishing that during 2005 Mr . Fucaloro's

boxing-related activities constituted a trade or business within

the meaning of section 162 . On the record before us, we also

find that . petitioners have failed to carry their burden of

establishing that they satisfy all of the recordkeeping require-

"In fact, the record does not identify who Mr .

his relationship with Mr . Fucaloro during 2005 .

Suarez is or

. 12Mr . Fucaloro testified that as of the time of the trial in

this case he had been involved in boxing-related activities for

at least 20 years . Mr . Fucaloro also .testified .that he expected

to make a profit from his boxing-related activities . However, as

of the end of 2009 when the trial took place he had not done so

for any year . It is also significant that at no time did Mr .

Fucaloro maintain any contemporaneous diary or any books with

respect to his boxing-related activities . Nor did Mr . Fucaloro

maintain at any time a separate bank account for those activities . Finally, it is significant that the loss of $57,741 that

petitioners claimed in the 2005 Schedule C reduced the $250,652

of income that they reported in their 2005 return .

21 ments of section 274(d) and the regulations thereunder with

respect to the expenses for transportation, for hotels, for

meals, and for entertainment that they claimed in the 2005

Schedule C .

Based upon our examination of the entire record before us,

we find that petitioners have failed to carry their burden of

establishing that they are entitled to the expenses and the loss

of $57,741 that they claimed in the 2005 Schedule C .

We have considered all of . petitioners' contentions and

arguments that are not discussed herein, and we find them to be

without merit, irrelevant, and/or moot .

To reflect the foregoing,

Decision will be entered fo r

respondent.