- 7 -
been terminated); Johnson v. Commissioner, T.C. Memo. 1978-395
(no deduction allowed for mere expectation).
Thus, petitioner is not entitled to deduct the anticipated
wages lost because of his termination.
Trade or Business
Section 162 provides that "There shall be allowed as a
deduction all the ordinary and necessary expenses paid or
incurred during the taxable year in carrying on any trade or
business". Respondent contends that petitioner was not in a
trade or business with regard to Presto, because (1) he did not
have an "actual and honest objective of making a profit";3 or (2)
even if petitioner had the requisite profit objective, he was not
engaged in an active trade or business in 1992, but was only, at
most, in the startup phase of a trade or business. Respondent
further contends that, even if petitioner was in an active trade
or business, section 280A limits depreciation of a dwelling unit
used by the taxpayer during the year as a residence to the gross
income derived from such use for the tax year, less certain
allocable deductions. Thus, since petitioners have no gross
income, they are allowed no deduction for depreciation.
Section 195(a) provides, in relevant part, that "Except as
otherwise provided in this section, no deduction shall be allowed
for start-up expenditures." It is clear from the record that in
3 See Dreicer v. Commissioner, 78 T.C. 642 (1982), affd.
without opinion 702 F.2d 1205 (D.C. Cir. 1983).
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