                  T.C. Summary Opinion 2010-37



                       UNITED STATES TAX COURT



            PAUL AND MELODY FUCALORO, Petitioners v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 1082-09S.               Filed March 30, 2010.



     Paul and Melody Fucaloro, 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.1    Pursuant to section 7463(b), the deci-

sion to be entered is not reviewable by any other court, and this

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


     1
      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.
                                - 2 -

     Respondent determined a deficiency of $18,020 in petition-

ers’ 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.

                             Background3

     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 agreement



     2
      Respondent 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 presented
here.
     3
      As 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 2005

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[4] (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 agree-
    ment effective as of May 20, 2005] (hereinafter re-
    ferred to as “Boxer”).

                            RECITALS

          A.     Boxer desires to become duly qualified
                 and licensed as a professional boxer
                 with, among others, the Nevada State
                 Athletic Commission (the “Boxing Com-
                 mission”). 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 their
                 professional boxing career.




     4
      Although 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 ca-
       reer and Manager desires to undertake
       such representation on behalf of
       Boxer.

NOW, THEREFORE, the parties agree as follows:

1.     MANAGEMENT RELATIONSHIP

       (a) During the Term of this Agree-
ment, 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 repre-
sentative 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 jurisdic-
tions, 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 dispo-
sition, use, employment and exploitation of
Boxer’s services, talents and the products
thereof. Boxer agrees that Manager will
represent in connection with Boxer’s partici-
pation 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 disabil-
ity, restriction or prohibition, either con-
tractual or otherwise, with respect to
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 Man-
ager’s activities on Boxer’s behalf under
this Agreement will not infringe upon, vio-
late 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 MANAGER

       Manager, in conjunction with Boxer’s pro-
moter, shall provide such advice, guidance, direc-
tion 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 mat-
ters 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 shall
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 re-
sponsibilities 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 ap-
plicable 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.     TERM

       (a) The initial term of this Agree-
ment 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, Man-
ager shall have the option to extend the
Initial Term of this Agreement for an addi-
tional 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, Inter-
national 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 Oppo-
nent 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 appro-
priate) shall automatically be extended by
Boxers or Opponents disability.

4.     FINANCIAL CONSIDERATIONS

       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 docu-
ments required by the Boxing Commission to
remit such fees directly to Manager. For
purposes of this Agreement, Boxing Compensa-
tion 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, spon-
sorship, and all other revenues directly
related and received in connection with the
professional boxing career of Boxer.

5.     BREACH BY BOXER

       (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 mea-
sured 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 hereun-
der, which shall be in addition to and with-
out prejudice to any and all other rights and
remedies which the Manager may have. Man-
ager’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 injunc-
tive 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 indem-
nify and hold the Manager harmless against
and from any and all claims, damages, liabil-
ities, costs and expenses, including without
limitation reasonable attorney’s fees, aris-
ing 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 wrong-
ful act or omission by Boxer/Athlete.
                                   - 9 -

        *         *         *       *       *       *        *

            13.       ALTERATION AND AMENDMENT:INTEGRATION

                   (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 writ-
            ing 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 with
            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 man-
            agement 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 contempo-

rary 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 transpor-

tation 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 to

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 2005

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 expenses”5 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.




     5
      In the 2005 Schedule C, petitioners’ only description of
the “Other expenses” of $39,522 was “RECRUITMENT”.
     6
      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 -

                           Discussion

     Petitioners bear the burden of proving that the determina-

tions in the notice are erroneous.7    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 of

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 busi-

ness 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 for



     7
      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 the

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 substantiation

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 transpor-

tation, 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 ex-

penses 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) con-
     templates 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 corrobo-
     rative 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.].
                              - 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

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).




     8
      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 set
forth above that is otherwise required with respect to a deduc-
tion for entertainment. Instead, the taxpayer must establish the
following: (1) The date and the duration of the business discus-
sion; (2) the place of the business discussion; (3) the nature of
the business discussion and the business reason for the enter-
tainment or the nature of the business benefit derived or ex-
pected to be derived as the result of the entertainment; and
(4) the identification of the persons entertained who partici-
pated 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 2005

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

Mr. Fucaloro, (2) certain respective receipts (Mr. Fucaloro’s

receipts)9 for air and ground transportation, for hotels, for

meals, for entertainment, and for certain miscellaneous expendi-

tures,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.


     9
      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.
     10
      Mr. 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 expense

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 busi-

ness 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 specifi-

cally 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 enti-

tled to deduct the expenses for transportation, for hotels, for

meals, for entertainment, and for certain miscellaneous expendi-

tures 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.11

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 carry

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-


     11
      In fact, the record does not identify who Mr. Suarez is or
his relationship with Mr. Fucaloro during 2005.
     12
      Mr. 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 activi-
ties. 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 for

                                 respondent.
