David W. Chiu - Page 12

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            section 217 have been satisfied (in the case of all remaining                                
            moving expenses claimed).                                                                    
                  With respect to the pre-move househunting expenses claimed,                            
            such expenses are deductible only if incurred after the taxpayer                             
            has obtained employment at the new location.  If the new work is                             
            self-employment, the taxpayer is treated for this purpose as                                 
            having obtained new employment when substantial arrangements to                              
            commence such work have been made.  Sec. 217(b)(1)(C), (f)(2).                               
            For these purposes, the new principal place of work for                                      
            petitioner would be Hong Kong.  In light of petitioner's                                     
            testimony that at the time of his move to Hong Kong he had no                                
            specific plans to begin any particular business, we conclude that                            
            petitioner had not made "substantial arrangements" within the                                
            meaning of section 217(f)(2) at the time of the move, and                                    
            consequently he has failed to show his entitlement to a deduction                            
            for any pre-move househunting expenses.                                                      
                  As for petitioner's claimed deduction for expenses of                                  
            temporary quarters, the record is devoid of any substantiation of                            
            the actual expenditures for such quarters, or of any evidence                                
            from which the Court could determine the point in time (after                                
            arrival) when substantial arrangements to commence work had been                             
            made so that the expenditures might be eligible for deduction.                               
            Sec. 217(b)(1)(D), (f)(2).  Thus, petitioner has failed to show                              
            his entitlement to a deduction for temporary quarters expenses.                              

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