Thomas A. Johnson - Page 13

          Respondent acknowledges that the cost of developing computer                
          software may qualify as research and experimental expenses.                 
               Petitioner contends that expenditures for "utilities" and              
          "rent or lease" relate to the business use of his home.                     
          Petitioner's wife testified that one room in their home was                 
          petitioner's office.  We have insufficient evidence regarding the           
          portion of petitioner's home used for business purposes, and he             
          offered no evidence regarding the hours spent at his home for               
          business purposes or the business activities performed at his               
          home.  We find that petitioner has not substantiated the                    
          expenditures related to the business use of his home.  We sustain           
          respondent's determination as to these items.                               
               Petitioner has shown that the remaining expenditures he                
          reported on the Schedules C were associated with the Food Store,            
          and we now turn to whether they are deductible pursuant to                  
          section 174.                                                                
               Petitioner paid consulting fees to Voiland, Hendricken, and            
          Akabas.  Voiland testified that he advised petitioner about                 
          natural foods stores, how they are set up, and the types of                 
          products sold in them.  Voiland's advice included drawing and               
          modifying floor plans for a natural foods store.  Hendricken                
          helped petitioner prepare a business plan.  We find that these              
          activities did not relate to the development of computer                    

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