attached taxation writing assignment.

FACTS

For over a decade, Mr. Mookie (taxpayer) worked at least 40 hours per week as an attorney/employee for Bogarts Sports, Inc. (Bogarts), a company that makes baseball bats, where he makes approximately $162,000 a year. Mr. Mookie filed Forms 1040, U.S. Individual Income Tax Return, for the 2008 and 2009 tax years and reported salary income from Bogarts. With each return, Mr. Mookie also filed a Schedule C on which he claimed deductions for expenses and, for 2009, reported limited gross receipts. The Schedules C identified Mr. Mookie's business activity as “International Consulting” and the name of his business as “JBJ Industries”. JBJ Industries' business address is the same as the taxpayer's home address and he worked approzimately 10-20 hours per week on JBJ Industries’ projects. For the 2003 through 2012 tax years, Mr. Mookie reported on his Forms 1040 (1) salary income, (2) gross income, expenses, and net profit or loss from JBJ Industries, and (3) adjusted gross income, as follows:

From JBJ Industries

Year Salary income Gross income Expenses Net profit (loss) Adjusted gross

income

2003 $125,741 — $35,263 ($35,263) $91,988

2004 135,527 — 70,892 (70,892) 67,268

2005 137,069 — 80,345 (80,345) 62,217

2006 133,527 — 88,578 (88,578) 49,606

2007 138,750 — 84,240 (84,240) 59,501

2008 159,229 — 88,184 (88,184) 77,329

2009 165,305 $5,000 91,808 (86,808) 94,710

2010 172,779 — 41,818 (41,818) 47,345

2011 967,058 — 44,071 (44,071) 926,849

2012 219,103 — 32,825 (32,825) 198,863

Total 2,354,088 5,000 658,024 (653,024) 1,775,676

Mr. Mookie claims that JBJ Industries provides services such as identifying potentially lucrative business opportunities and:

 generates substantial income and profit for JBJ Industries and its clients,

 determines the best markets for company products through industrial analysis reports,

 develops an effective marketing strategy for products,

 evaluates international competition,

 identifies legal and regulatory issues,

 locates financing and development projects that support manufacturing and promotion of products

 negotiates and writes contracts, and

 settles trade disputes

JBJ Industries engaged in many business ventures between 2002 through 2008. Nearly all were abandoned. The only ventures not abandoned were its ownership of an interest in a graphic design company in Guam, a Filipino jewelry export business, and efforts to determine the feasibility of establishing a bakery to serve call center workers in the Philippines. Although an attorney for a bat making company, Mr. Mookie claimed to take an equity position as payment for present and future services to these companies. He also claimed to retain consultants with the necessary expertise to identify lucrative opportunities and advise on abandoning projects that may not generate profits. However, his vetting of these individuals is suspect.

JBJ Industries maintained no formal books and records except for a hodgepodge of receipts, credit card statements, invoices, and bills. These records showed charges related to six round trips to the Philippines and include:

 air travel, ground transportation, lodging, meal, and incidental expenses incurred for travel to and within the Philippines

 subscriptions to the Los Angeles Times and to the Golf Magazine

 cable, Internet, and telephone service for taxpayer's home

 mobile telephone service

 taxpayer's auto, health, and life insurance

 annual California Bar membership dues

 membership fee for the Divers Alert Network

 foreign transaction fees and finance charges imposed by various credit card providers

Mr. Mookie prepared a “Business Travel & Expense Report” for each trip on which he described the trips' purpose as, uniformly, “to assist client with business opportunities in Philippines. To pursue business ops.”.

Its business plan described itself as follows: “Engage in international trade of U.S. companies into foreign markets, engage in international trade of foreign companies into U.S. markets, and invest in developing businesses in foreign markets all with the intent to produce income and profit.”

Questions: For 2008 and 2009, is the activity reported on taxpayer's Schedule C, Profit or Loss from Business, an activity engaged in for profit? Are the expenses listed above deductible?