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sale, petitioner, to date, has not accomplished the main purpose
of his activity; i.e. to construct and sell for profit a luxury
"build to suit" home. As stated in Richmond Television Corp. v.
United States, 345 F.2d 901, 907 (4th Cir. 1965), vacated per
curiam on other grounds 382 U.S. 68 (1965):
even though a taxpayer has made a firm decision to enter
into business and over a considerable period of time spent
money in preparation for entering that business, he still
has not "engaged in carrying on any trade or business"
within the intendment of section 162(a) until such time as
the business has begun to function as a going concern and
performed those activities for which it was organized. [Fn.
ref. omitted.]
Thus, "carrying on a trade or business" requires a showing of
more than initial research into business potential and
solicitation of potential customers or clients. Dean v.
Commissioner, 56 T.C. 895, 902 (1971). Further, "carrying on a
trade or business" also requires more than identifying,
contacting, and agreeing with potential partners, contractors, or
other business personnel. Richmond Television Corp. v. United
States, supra at 907. The business operations must actually have
commenced to satisfy the third of the criteria noted above.
Courts have consistently held that preopening and startup
expenses are not deductible under section 162(a).
Based on the case law cited above, petitioner's actions in
connection with his New Jersey properties did not rise to the
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