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preopening expenses. Respondent cites Richmond Television Corp.
v. United States, 345 F.2d 901, 907 (4th Cir. 1965), vacated and
remanded on other issues 382 U.S. 68 (1965), original holding on
this issue reaffd. 354 F.2d 410, 411 (4th Cir. 1965), overruled
on other grounds NCNB Corp. v. United States, 684 F.2d 285, 289
(4th Cir. 1982), for the proposition that preopening expenses are
nondeductible:
The uniform teaching of * * * [certain prior] cases is
that, 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. refs.
omitted.]
We agree with respondent that the expenditures made by the
corporation during 1989 and 1990 were nondeductible preopening
expenses. Petitioners have not carried their burden of proving
that the corporation had engaged in carrying on any trade or
business before or during the years in question. Although the
corporation may have reported gross receipts from the sale of
what petitioners characterize as "mostly low cost merchandise"
during 1988, such receipts and the corporation's verifiable
expenses for 1988 were allocated by respondent to Scott's Limo.
Petitioners agreed to that adjustment. From those facts, we
conclude, and find, that the receipts and expenditures were
incurred in the trade or business of Scott's Limo, not in a trade
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