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overruled on other grounds NCNB Corp. v. United States, 684 F.2d
285, 289 (4th Cir. 1982); Hardy v. Commissioner, 93 T.C. 684,
687-688 (1989); Jackson v. Commissioner, 86 T.C. 492, 514 (1986).
As the Court of Appeals for the Fourth Circuit said in Richmond
Television Corp. v. United States, 345 F.2d at 907:
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.]
Except for the interest, depreciation, and taxes deducted by
Good Shepherd, all of Good Shepherd's deductions for 1986 through
1988 are deductions governed by section 162(a).
Petitioners bear the burden of proof.
1. Verification
Respondent has challenged whether expenditures claimed by
Good Shepherd were ever paid or incurred. Petitioners have
failed adequately to verify, or substantiate, those expenditures.
For 1987 and 1988, Good Shepherd claimed deductions for travel
and entertainment. Petitioners have introduced no evidence that
would satisfy the special substantiation requirements imposed by
section 274(d) with regard to expenditures for travel and
entertainment. With regard to Good Shepherd's other expenditures
claimed for deduction under section 162(a), for the most part,
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