David W. Chiu - Page 21

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                  Other than the Schedule C, prepared over 4 years after the                             
            period in question, petitioner offered no documentary evidence to                            
            corroborate his testimony that the claimed expenses were paid.                               
            Petitioner offered no testimony that would connect several of the                            
            expense categories, such as bad debts, commissions and fees,                                 
            depreciation and section 179 expense, and meals and                                          
            entertainment, to the research activities he claimed were being                              
            undertaken and which provided the rationale for claiming expense                             
            treatment on the Schedule C.  On this record, we conclude that                               
            petitioner has failed to substantiate that the claimed expenses                              
            were paid or incurred.                                                                       
                  In addition, petitioner offered no evidence beyond his self-                           
            serving testimony that these expenses were paid "in carrying on"                             
            a trade or business within the meaning of section 162(a).                                    
            Petitioner reported no gross receipts on the Schedule C and                                  
            offered no documentary evidence whatsoever of the conduct of a                               
            business.  Petitioner testified that he did not have plans to                                
            start a specific business when he arrived in Hong Kong, and given                            
            that the parties have stipulated that his arrival occurred in                                
            November 1990, the available evidence suggests that it was                                   
            unlikely that petitioner was actually engaged "in carrying on any                            
            trade or business" for purposes of section 162(a) within the 1990                            
            taxable year.  Cf. Commissioner v. Groetzinger, 480 U.S. 23, 35                              
            (1987).  On this record, we conclude that petitioner has failed                              

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