Patrick F. and Arlene G. Sheehy - Page 10

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               Petitioners have not shown that the $50,000 paid to RCC in             
          1992 was spent on research or experimentation activities.  Nor              
          have they shown a connection between any research or                        
          experimentation activities and a trade or business conducted by             
          petitioner.  Accordingly, we hold that petitioners are not                  
          entitled to deduct their $50,000 payment to RCC in 1992 under               
          section 174.  Additionally, because the activities of petitioner            
          did not constitute a trade or business, petitioners are not                 
          entitled to deduct the expenditure as an ordinary and necessary             
          business expense under section 162(a).                                      
                                             Decision will be entered                 
                                        under Rule 155.                               

























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