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deduct startup expenditures. Taxpayers, however, may elect to
treat startup expenditures as deferred expenses which may be
amortized over a period of not less than 60 months as may be
selected by the taxpayer, beginning with the month in which the
active trade or business begins. Sec. 195(b)(1). Startup
expenditures include only those expenditures "which, if paid or
incurred in connection with the operation of an existing active
trade or business * * *, would be allowable as a deduction for
the taxable year in which paid or incurred." Sec. 195(c)(1)(B).
For this reason, an expenditure which an existing trade or
business would capitalize, rather than wholly expense, cannot be
amortized as a startup expenditure. S. Rept. 96-1036 at 12
(1980). A taxpayer seeking to amortize startup expenditures must
elect do so no later than the time prescribed by law for filing
the return for the taxable year in which the trade or business
begins. Sec. 195(d)(1).
Respondent denied petitioners' claimed deduction seeking to
amortize startup expenditures for two reasons: (1) Petitioners
failed to make a timely election to amortize startup
expenditures, as required by section 195, and (2) petitioners
have failed to meet their burden of substantiating the amount of
startup expenditures claimed. With respect to respondent's first
argument, petitioners assert that they made a timely election to
amortize their startup expenditures. At trial, petitioner
attempted to prove that he made a timely election to amortize
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