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mechanism to disguise the capital contributions of the limited
partners as currently deductible expenditures and thus reduce the
cost of their participation in the farming venture.
Accordingly, we hold that Utah I is not entitled to deduct
its losses for research or experimentation expenditures under
section 174. Additionally, because the activities of Utah I did
not constitute a trade or business, Utah I is not entitled to
deduct its losses in 1982 and 1983 as ordinary and necessary
business expenses under section 162(a). Respondent is sustained
on these issues.
To reflect the foregoing,
Decision will be entered
for respondent.
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