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Showing posts with label start. Show all posts
Showing posts with label start. Show all posts

Sunday, July 3, 2022

Can A Business Start Before Having Revenue?

 

It is one of my least favorite issues: when does a business start?

The reason is that expenses incurred before the start-up date are considered either organizational or start-up expenses and cannot be immediately deducted. The IRS allows a small spot (of $5,000) and expenses over that amount are to be amortized over 15 years.

It used to be five years. The issue was less of a blood sport back then.

For many of us, the start-up date is easy: it is when you open your doors to customers or clients. Let’s say you are a chiropractor. Your start-up date is when the office opens. What if you do not have a patient that day? Same answer: it is the day you open the doors.

Let’s kick it up a notch.

Say you open a restaurant. When is your start date?

The day you have first serve customers, right?

Yes, with a twist. Many restaurants have a soft opening, which is a seating for a limited number of people (think family, friends and media critics) to test service and the kitchen. This might be days or weeks before the actual grand opening – that is, when doors open to the general public.  

Many tax accountants – me included – consider a restaurant’s soft opening to be the start date.

The reason we want an earlier rather than a later date is to start deducting expenses. If you are reaching into your pocket or borrowing money to pay rent, utilities, promotion and staff, you want a tax deduction now. You might consider me to be crazy man Michael were I to talk about deducting over 15 years.

Let’s kick it up another notch. Let’s talk about a web-based business.

Gregg Kellett graduated from college in 2002 and opened a website. He went corporate in 2007, and in 2011 he moved to Bloomberg, a publisher of legal and business information. While there he saw an opportunity to better aggregate and access online demographic, social and economic data. If he could pull it off, he could offer a more user-friendly interface and make a couple of bucks in the process.

So in 2013 he bought a website (vizala.com). He formed a company by the same name. He hired remote computer engineers to develop features he wanted in the website. They finished core work in March 2015 and resolved bugs through September 2015. An example of a “bug” was an interactive table that would not presently correctly in the Firefox browser.

Kellett figured to make money at least four ways:

(1)  Selling advertising space

(2)  Implementing a paywall

(3)  Selling personalized charts and other information

(4)  Licensing data

He did not pursue any of those strategies during 2015.

However, he did deduct approximately $26 grand on his 2015 return.

He also did not earn any revenue until 2019.

Sure enough, the IRS disallowed the $26 grand because Kellett was not in an “active” trade or business. They wanted him to deduct the expenses over (almost) the same period as putting a kid though grade school and then college.

Off to Tax Court.

If we pull back to the general rule – the date of first revenues – this is going to hurt.

But the website was available by September 2015. It wasn’t rocking like Netflix upon release of the 2022 season’s second half of Stranger Things, but it was available.

The Court wanted to know what happened between 2015 and 2019.

Kellett explained that maximizing his long-term profit potential required building trust among users. After that would come the advertisers. He started building trust by promoting the website to over a hundred universities and professional organizations. This was enough work that he hired a marketing professional to assist him. The work paid-off, as about 50% on the institutions added Vizala to their lists of research databases. 

The Court understood what he did. The website was available by September 2015. It was not all it could be as Kellett had plans for its long-term profitability, but that did not gainsay that the website was available. Considering that the business was the website, that meant that the business also started in September 2015. Expenses before that date were startup expenses. Expenses after that date were immediately deductible.

Revenues did not play into the decision, fortunately.

It was the website version of the chiropractor opening his/her office, albeit with no patients on the first day.

Kellett won, but it cost a visit to Tax Court.

Our case this time was Kellett v Commissioner, T.C. Memo 2022-62.

Sunday, January 9, 2022

Starting A Business In The Desert

 

Tax has something called “startup costs.”

The idea is to slow down how quickly you can deduct these costs, and it can hurt.

Let’s take a common enough example: starting a restaurant.

You are interested in owning a restaurant. You look at several existing restaurants that may be available for purchase, but you eventually decide to renovate existing space and open your own- and new – restaurant. You lease or buy, then hire an architect for the design and a contractor for the build-out of the space.

You are burning through money.

You still do not have a tax deduction. Expenses incurred when you were evaluating existing restaurants are considered investigatory expenses. The idea here is that you were thinking of doing something, but you were not certain which something to do – or whether to do anything at all.

Investigatory expenses are a type of startup expense.

The contractor comes in. You are installing walls and windows and floors and fixtures. The equipment and furniture are delivered next.

You will depreciate these expenses, but not yet. Depreciation begins when an asset is placed in service, and it is hard to argue that assets are placed in service before the business itself begins.

You still do not have a tax deduction.

You will be the head chef, but still need your sous and line chefs, as well as a hostess, waitpersons, bartender and busboys. You have payroll and you have not served your first customer.

It is relatively common for a restaurant to have a soft launch, meaning the restaurant is open to invited guests only. This is a chance to present the menu and to shakedown the kitchen and floor staff before opening doors to the general public. It serves a couple of purposes: first, to make sure everyone and everything is ready; second, to stop the startup period. 

Think about the expenses you have incurred just to get to your soft launch: the investigatory expenses, the architect and contractor, the construction costs, the fixtures and furniture, employee training, advertising and so on.

Carve out the stuff that is depreciable, as that has its own rules. The costs that are left represent startup costs.

The tax Code – in its wisdom or jest – allows you to immediately deduct up to $5,000 of startup costs, and even that skeletal amount is reduced if you have “too many” startup costs.

Whatever remains is deductible pro-rata over 15 years.

Yes, 15 years. Almost enough time to get a kid through grade and high school.

You clearly want to minimize startup costs, if at all possible. There are two general ways to do this:

·      Start doing business as soon as possible.  Perhaps you start takeout or delivery as soon as the kitchen is ready and before the overall restaurant is open for service.

·      You expand an existing business, with expansion in this example meaning your second (or later) restaurant. While you are starting another restaurant, you are already in the business of operating restaurants. You are past startup, at least as far as restaurants go.

Let’s look at the Safaryan case.

In 2012 or 2013 Vardan Antonyan purchased 10 acres in the middle of the Mojave desert. It was a mile away from a road and about 120 miles away from where Antonyan and his wife lived. It was his plan to provide road access to the property, obtain approval for organic farming, install an irrigation system and subdivide and rent individual parcels to farmers.  

The place was going to be called “Paradise Acres.” I am not making this up.

Antonyan created a business plan. Step one was to construct a nonlivable structure (think a barn), to be followed by certification with the Department of Agriculture, an irrigation system and construction of an access road.

Forward to 2015 and Antoyan was buying building materials, hiring day laborers and renting equipment to build that barn.

Antoyan and his wife (Safaryan) filed their 2015 tax return and claim approximately $25 thousand in losses from this activity.

The IRS bounced the return.

Their argument?

The business never started.

How did the IRS get there?

Antonyan never accomplished one thing in his business plan by the end of 2015. Mind you, he started constructing the barn, but he had not finished it by year-end. This did not mean that he was not racking-up expenses. It just meant that the expenses were startup costs, to be deducted at that generous $5,00/15-year burn rate starting in the year the business actually started.

The Court wanted to see revenue. Revenue is the gold standard when arguing business startup. There was none, however, placing tremendous pressure on Antonyan to explain how the business had started without tenants or rent – when tenants and rent were the entirety of the business.  Perhaps he could present statements from potential tenants about negotiations with Antonyan – something to persuade the Court.   

He couldn’t.

Meaning he did not start in 2015.

Our case this time was Safaryan v Commissioner, T.C. Memo 2021-138.

Sunday, October 31, 2021

A Winter Barge and Depreciation

 

The question comes up with some frequency: when is an asset placed-in-service for tax purposes?

Generally one is talking about depreciation. Buy an expensive asset near the end of the year, allow for delivery (and perhaps installation) time and one becomes quite interested with the metaphysics of depreciation.

Let me give you a couple of situations:

·      You finish constructing an office building near the end of the year. It is ready-to-go, but your first tenant doesn’t move in until early the following year. When do you start depreciation?

·      You are a pilot and buy a plane through your business. It is delivered in the last few days of December. There is no business travel (as it is near year-end and between holidays), but you take the plane up for its shakedown flight. When do you start depreciation?

The numbers can become impressive when you consider that we presently have 100% bonus depreciation, meaning that a qualifying asset’s cost can be depreciated/deducted in full when it is placed in service.

And what do you do in COVID 2020/2021, if you buy an asset but government orders and mandates restrict or close the business?

There is a classic tax case that goes back to the 1960s. It distinguished between an asset being ready and available for use and actually being placed into use. Why the nitpicking? Because life happens. In general, a place-in-service date occurs when the asset is ready and available for use.  

Well, that rule-of-thumb would help with COVID 2020/2021 issues.

On to our case.

A company in New York bought a barge from a builder in Louisiana.

The barge made it to Rome, New York.

It was outfitted and ready to go by the end of 1957.

Winter came. The canal froze. The barge was stuck in a frozen New York canal until spring of 1958.


When was the barge placed-in-service?

You know the IRS was on the side of 1958. They had persuasive arguments in their favor, and that – plus the sheer cost of a barge – meant the matter was going to be litigated.

Here is the Court:

… the barge was ready for charter or for use in the taxpayer’s own distribution business by December 1, 1957, but could not be used until May, 1958, because it was frozen into the water of an upstate canal. This was certainly not a condition which the taxpayer desired to bring about.”

And here is the staying power of the case:

… depreciation may be taken when depreciable property is available for use ‘should the occasion arise,’ even if the property is not in fact in use.”

Common tax issue + dramatic facts = memorable tax law.

Our case this time was Sears Oil Co., Inc v Commissioner, 359 F.2nd 191 (2d Cir 1966).

Sunday, January 26, 2020

Maple Trees, Blueberries and Startup Expenses


It is one of my least favorite issues in tax law. It is not a particularly technical issue; rather, it too often imitates theology and metaphysics:

When does a business begin?

For some businesses, it is straightforward. As a CPA my business starts when I take office space or otherwise offer my services to the public. Other businesses have their rules of thumb:
·        An office building begins business when it obtains a certificate of occupancy from the appropriate municipal government.
·        A restaurant begins (usually) after its soft opening; that is, when it first opens to family, friends, possibly food reviewers and critics - and before opening to the general public.
What can make the issue difficult was a 1980 change in the tax law. It used to be that start-up costs could not be immediately deducted. Rather one had to accumulate and deduct them over a 5-year period.

Unfortunate but not ruinous.

In 1980 the law changed to allow a $5,000 deduction; the balance was to be deducted over a 15-year period.

Can you imagine the potentially fraught and tense conversations between a taxpayer and the tax advisor? Rather than injecting moderate but acceptable pain, Congress introduced dispute between a practitioner and his/her client.

Let’s look at a case involving startup costs.

James Gordon Primus lived in New York and worked as an accountant at a large accounting firm. In 2011 his mother bought 266 acres in southwest Quebec on his behalf. The property contained almost 200 acres of maple trees. The trees were mature enough to produce sap, so I suppose he could start his new business of farming.



But there were details. There are always details.

He wanted to clear the brush, as that would help with production later on. He also wanted to install a collection pipeline, for the obvious reason. He also had plans for blueberry production.

He started thinning the maple brush in 2011, right after acquiring the property.

Good.

In 2012 and 2013 he started clearing for blueberry production. 

He ordered 2,000 blueberry bushes in 2014.

In 2015 he began installing the pipeline and planted the blueberry bushes.

In 2016 he readied the barn.

In 2017 he finally collected and sold maple sap.

Got it: 6 years later.

On 2012 he deducted over $200 grand for the farm.

On 2013 he deducted another $118 grand.

That caught the attention of the IRS. They saw $318 grand of startup expenses. They would spot him $5 grand and amortize the rest over 15 years.

Not a chance argued Primus.

He started clearing in 2011, and clearing is an established farming practice. He was in the trade or business of farming by 2012.

Clearing is an accepted practice, said the Court, but that does not mean that one has gotten past the startup phase. Context in all things.

Primus offered another argument: a business can start before it generates revenues.

That is correct, responded the Court, but lack of revenue does not mean that business has started.

Here is the Court:
Petitioner’s activities during 2012 and 2013 were incurred to prepare the farm and produce sap and plant blueberries. Those are startup expenses under section 195 and may not be deducted under section 162 or 212.”
The taxpayer struck out.

Get this issue wrong and the consequences can be severe.

How would one plan for something like this?

I do not pretend to be an expert in maple farming, but I would pull back to general principles: show revenues. The IRS might dismiss the revenues as inconsequential and not determinative that a startup period has ended, but one has a not-inconsequential argument.

That leads to the next principle: once one has established a trade or business, the expenses of expanding that trade or business (think blueberries in this instance) are generally deductible.

I wonder how this would have gone had Primus tapped and sold sap in 2012. I am thinking limited production but still enough to be business-consequential. Perhaps he could market it as “rare,” “local,” “artisanal” and all the buzz words.

Perhaps he could have followed the next year with another limited production. I am trying to tamp-down an IRS “not determinative” argument.

Would it have made a difference?

Sunday, June 10, 2018

When Do You Really Start A Business?



It doesn’t sound like much, but it can present a difficult tax issue.

When does a business start?

It helps to have sales. Sales are good. But sometimes you do not have sales.

Then what?

The issue is that tax law allows deductions for expenses incurred in a trade or business. This presumes that the activity has started and is occurring on a regular and continuous basis. Before that point it is more like an intent or hope than an actual business.   

Let’s set-up our story.

Taxpayer was a tax specialist, although I am not sure what that means. His wife was a nurse. For 2013 and 2014 he reported self-employed real estate losses of $15 and $22 thousand, respectively.

Got it. He is tax specialist when is he is not working real estate.

In 2010 he obtained a real estate license. He got together with friends and family and decided to invest in residential real estate. They were going to flip houses. The investor group decided to look in West Sacramento, California, (fortuitously, where he lived). On Saturdays he would leave home, drive 192 miles to Marina, California and pick-up one or more members of the group. They would return to Sacramento to check out houses and then back to Marina. At days-end, our protagonist would finally return home to West Sacramento.


Fortunately, he kept logs for all this driving. He racked up 24,882 miles in 2013 and 25,220 in 2014.

They never bought any property.

He also made no money as a real estate agent.

The IRS audited 2013 and 2014 and bounced the real estate expenses.

Off they went to Tax Court.

His argument was simple: are you kidding me? He was a realtor. He kept mileage logs. He had third parties who could testify that he did what he said he did. What more did the IRS want?

The IRS said that – whatever he was doing – it was not a trade or business.

There was no evidence that he was regularly and continuously working as a real estate agent for those years. You know, no income and all. 

So, what did the IRS think he doing with the family-and-friends consortium?

He was trying to start a business, a business flipping houses. But he and they never flipped a house, Heck, they never even bought a house. He was as much a house flipper as I am a retired ex-NFL player.

That put him in a tough spot.

Here is the Tax Court:
At best, petitioner husband’s activity in 2013 and 2014 was in the exploratory or formative stages of forming a business of flipping houses. Carrying on a trade or business requires more than initial research into a potential business opportunity; it requires that the business have actually commenced.
Section 162(a) does not permit current deductions for startup or preopening expenses incurred by a taxpayer before beginning business operations.”
He lost.

The IRS now wanted penalties – “substantial underpayment” penalties. This is a “super” penalty, for when the regular penalty is just not enough.

Remember that taxpayer listed his occupation as “tax specialist.”

Bad idea when you are trying to get penalties abated.

Here is the Court:
Petitioner husband considered his occupation to be a “tax specialist” and operated a tax preparation services business as a sole proprietorship. However, in preparing their tax returns petitioners failed to exercise due care or to do what a reasonable person would do under the circumstances to determine whether petitioner husband was in a trade or business ….”
Ouch.

The case is Samadi v Commissioner, for the home gamers.


Friday, September 9, 2016

When Does A Business "Start"?

There is a category of deductions that the tax Code refers to as “start up” or “pre-opening” expenses.

For the most part, you do not want to go there.

An active trade or business is allowed to deduct its normal and operating expenses (as defined and limited by the Code, of course). There is a trap in that description, and the trap is the word “active.”

What does it mean be active?

It means the business is up and running.

How can a business not be up and running?

Let's say that you are opening a Five Guys Burgers and Fries restaurant. You have all kinds of expenses - in addition to building the place - before you open the doors. You have to turn on the lights, hire and train employees, establish suppliers and receive inventory, and so forth.

All this before you sell your first hamburger.

The problem is that you cannot deduct these expenses, because you have not yet started business. You have to be in business before you can deduct your expenses. There is a Kafkaesque absurdity to the whole thing.

The Code however does step-in and provide the following safety valve in Section 195:

(a)Capitalization of expenditures
Except as otherwise provided in this section, no deduction shall be allowed for start-up expenditures.

(b)Election to deduct 
(1)Allowance of deduction If a taxpayer elects the application of this subsection with respect to any start-up expenditure
(A)the taxpayer shall be allowed a deduction for the taxable year in which the active trade or business begins in an amount equal to the lesser of

(i) the amount of start-up expenditures with respect to the active trade or business, or
(ii) $5,000, reduced (but not below zero) by the amount by which such start-up expenditures exceed $50,000, and
(B) the remainder of such start-up expenditures shall be allowed as a deduction ratably over the 180-month period beginning with the month in which the active trade or business begins.

I do not consider it much of a safety valve, as the best you can get is $5,000. Let the expenses go over $55,000 and you lose even that. You deduct the balance over 180 months.

That is 15 years. Think about it: you can start a kid in first grade and almost put him/her through college before you get to fully deduct your Five Guys start-up and pre-opening expenses.

And that is the problem: the period is so long that it effectively is a penalty. It is one thing when Walmart opens a super store, as they are towing the resources (and cash flow) of a Fortune 500. It is a different issue when a budding entrepreneur heads out there with a hope and a prayer.

Let’s look at the Tizard case.

Julie Tizard graduated from Baylor and entered the Air Force as a 2nd lieutenant. While serving at Wright-Patterson in Dayton, Ohio, the USAF announced that women would be allowed to apply for pilot positions. Julie was all over that, becoming a pilot and rising through the ranks as instructor pilot, flight commander and wing flying safety officer.

In 1990 she started working as a full-time commercial pilot with United Airlines, where she flew 737s, 757s, 767s and the Airbus 320.

The FAA requires commercial pilots to retire at age 65.

Knowing that, she looked for things to do after she turned 65. She decided to start an aviation business in Arizona. She selected an airplane model (the Slingsby T-67C “Firefly”), a single engine propeller model that is fuel-efficient, has excellent visibility, is responsive and is “acrobatic.” Acrobatic apparently has a different meaning to pilots than to ordinary people – think of intentionally rolling or stalling the plane. You have as much chance of getting me on that plane as the Browns have of winning the Super Bowl this year.


She purchased the plane for $54,200. It turned out that the guy selling the plane was a real estate developer with a development in Phoenix. He expressed interest in her services. She was off to a promising start.

She posted a picture of herself with the plane on Facebook. She received 50 “likes.”

The same day she got the plane home, she took out an acquaintance whom she considered a potential client. Being promotional, Julie did not charge her.

Julie set-up an LLC (Tizard) for the business.

She worked up a business plan. She would start by offering aerial land surveys, flight charters and aviation photography, as well as professional aviation and safety consulting. The Firefly was well-designed for this use, and to the best of Julie’s knowledge she was the only person in central Arizona offering this menu of services.

She crunched the numbers and figured that she would break-even at 2.5 aviation hours per month. At 15 hours she was earning a meaningful profit.

Sounds like Julie knew what she was doing.

Time came to prepare her 2010 tax return. She had no income from the airplane and over $13 thousand of expenses.

The IRS bounced her return. They said she had not yet started business.

There are several factors that one considers in determining whether business activities have started:

         (1) Sales

         This is the best evidence, but she did not have any.

         (2) Advertising and marketing
She posted on Facebook and had approached both the seller of the plane as well as an acquaintance as potential customers.
         (3) Business Plan
She had given the matter some thought. She researched potential competition and had analyzed costs to the extent she knew how many flight hours per month were required to break-even.
Seems to me that she had one solid (factor (3)) and one so-so (factor (2)).

Problem is that factor (1) is the elephant in the room. Nothing gets the IRS to back off more than a real person handing over real money.

The Court seemed to like Julie:
The Court found the petitioner's testimony to be credible and forthright."
But the Court was not impressed with Julie's marketing:
However, other than the picture and short statement (that makes no mention of her aviation business) that she posted on her personal Facebook page ..., petitioner did nothing in 2010 to formally advertise to the general public ... or describe the various services that Tizard would offer to its clients."
That left a lot of pressure on factor (3). It was too much pressure, unfortunately:
Petitioner's ... efforts ... do not impress the Court as evidence that Tizard was actually functioning and performing the activities for which it was organized."
The Court decided she had not started business in 2010.  She had to run her expenses through the Section 195 filter. The best she could deduct was $5,000, and the balance would be allowed over the next 15 years.

Is there something she could have done differently?

She could have tried harder to line-up that first paying customer. To be fair, she acquired the plane late in the year, which allowed her little time to react.

Absent revenues, marketing became a critical factor. The Court wanted more than a hopeful conversation or Facebook photo of her next to her new plane. 

I am thinking she should have set-up a business website - including history, services, photos - for the airplane business. Perhaps that, with her business plan, would have been enough.

Monday, March 14, 2016

Vacation Or Business Deduction?



Let’s say that we work together. I cannot attend an appointment with a new client first thing in the morning. You volunteer to cover for me.

By the way, welcome to tax practice. Believe me, it is not the glitz and glamour that Hollywood makes it out to be. I know: hard to believe.

You meet the Fishers. They are both attorneys, he as partner in a firm and she as a sole practitioner. They have three children, all under the age of 10. She takes her kids to work periodically for the customary reason: the cost of day care and family members unable to care for the kids at the time.

She had an opportunity to represent a client in the Czech Republic for a few weeks, and she took it. It turned out however that he was unable to watch the kids. Seeing herself in a jam, she took the kids with her but came up with a novel twist:

She would write a travel book about the Czech Republic. It would be written to and for kids and would lessen their tedium while travelling.

She had no previous writing experience, so this was new territory. It occurred to her that other parents might be interested in such books – and this could be a business opportunity for a sharp and motivated person.


She has kept this up now for three years. She has now taken the kids to Disney World as well as to several cities in Europe.

You talk to her about the IRS and its “hobby loss” rules. She is an attorney, not a writer; there is a gigantic personal enjoyment factor present, ….

She cuts you off. Remember: she is an attorney. She has read up on this area of tax law, and she thinks she meets the requirements. For example,

·        She consulted with one of her clients, a published author, who gave her advice on both writing and publishing.
·        That person introduced her to a book distributor, who suggested she hire a graphic designer. She did so.
·        She also consulted with a friend who works at HarperCollins; the friend recommended she hire an agent. She has not done that yet.
·        She completed four prototype books, but has not submitted them for publication. She has instead self-published. Sales however have been minimal.

The Fishers need to file returns for the last three years. Her combined loss from the book-writing activity is approximately $75,000.

They ask whether you can prepare their returns and claim the book-writing loss.

What do you say?

The big issue is whether the activity rises to the level of a tax deduction. You remember some of the factors that the IRS uses to identify a hobby:

·        Not run in a business-like fashion
·        Failure to consult experts
·        Failure to revise business plans when losses pile up
·        Profits dwarfed by the losses

But Ms. Fisher has been meeting people. She has made contacts at a publishing house. She has written prototypes. She has self-published. She seems to be getting some things right.

You don’t see a clear-cut answer. Two people can reasonably disagree. The problem of course is that the IRS has a bit more horsepower than the average person you might disagree with.

You wobble. You tell them that you want to review the literature in this area, as the issue is walking the grey lands. You will call them tomorrow.

We have a chance to talk about the meeting.

I see two things immediately:

(1)   Can we prepare and sign the return under professional standards?
(2)   If so, there is still a significant chance that they would lose the deduction on audit.

Professional standards allow a tax practitioner some leeway when confronted with certain issues. This is fortunate, or professional practice would likely grind to a near halt.  The bar can be higher or lower depending upon the particular issue under discussion. Take a “listed transaction,” for example, and the bar is pretty high. Listed transaction is jargon for tax shelter, and we are nowhere near that with the Fishers. Our bar is much lower.

However, I would say our best chance with the IRS is 50:50, and likely less than that.  We would discuss this with the client and allow them to decide. It is their return, after all. Maybe they will get another accountant’s opinion. Maybe I am wrong.

This is a real case, by the way.

The Fishers are from New York and took this issue to Tax Court.

They lost.

The Court decided that her activity was not so much a business as her investigating going into business. The Court pointed out a few things: she had not hired an agent, had not finalized a book, and had not submitted a proposal to a publishing house. Since business activity had not started, it did not have to consider whether the activity was a hobby.

No business activity = no business deduction.

What do I think?

The Court saw too much personal and not enough business. I suppose that had she been making money the Court may have relented. She had to clear the hurdle of deducting what many people would see as vacations, and that required some serious weight on the other end of the see-saw to sway the Court.