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In addition, despite the fact that selecting a name for his
business was "very important", petitioner did not file his
fictitious business name statement with the State of California,
indicating the name under which he planned to conduct his ancient
artifacts business, until May 7, 1991. Petitioner testified that
it was not until that time that he satisfied the criteria for his
business plan, which included accumulating a certain amount of
inventory.
Petitioner was not actively involved in an ancient artifacts
trade or business during 1990. Instead, he was accumulating the
necessary inventory and developing the reputation he would need
to conduct the business. At trial, petitioner stressed the
amount of preparation required to conduct this type of business,
yet he acquired his first piece of inventory only in the fall of
1989. Although lack of sales is not dispositive, petitioner made
no sales of ancient artifacts in 1990. The rational explanation
for his failure to make any sales is that he was not conducting
an active trade or business during 1990, as he did not yet have
sufficient inventory or a commercial gallery. Furthermore,
according to petitioner's testimony, he was not conducting any
type of sales activity.
Accordingly, respondent is sustained on this issue.
Petitioner's 1990 expenses related to ancient artifacts are
startup expenses pursuant to section 195.
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