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manufacture, and the parties did not have any agreements or
contracts (which would only be arranged upon being hired), and it
appears they were merely surveying potential mass transit areas.
It seems that petitioner and the group were searching for
business that might or might not materialize. The fact that
petitioner and the group submitted a proposal does not mean that
the activity rose to the level of an active trade or business.
See Kennedy v. Commissioner, T.C. Memo. 1973-15 (“the ability to
transact business does not satisfy the ‘carrying on’ requirement
of [section 162]”); see also Richmond Television Corp. v. United
States, supra.
In light of our holding that petitioner is not entitled to
deduct any expenses related to the Sky Shuttle activity for the
reasons stated, we need not address the section 183 or
substantiation issues.
Day Care Expenses
Mrs. Willits has been a State-licensed day care provider
since 1979. She was allowed a maximum of four infants and two
school-age children (who would come after school). Mrs. Willits
would care for the infants until they reached 18 to 20 months of
age. Mrs. Willits started her day care activities at 7 a.m. She
would make sure the areas in her home were prepared for the
arrival of the children by 7:30 a.m. The children usually left
around 5 p.m. On weekends, Mrs. Willits cleaned the house and
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