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Section 162(a) allows a deduction for the ordinary and
necessary expenses paid or incurred during the taxable year in
carrying on a trade or business. The record contains evidence of
communications which petitioner had in 1991 and 1992 concerning
potential trade with individuals in the former Soviet Republics,
including Russia. However, there is no evidence that any
completed business transactions resulted from his communications
and travel to Russia. Petitioner testified that the lack of a
reliable infrastructure and instability in the Russian currency
convinced him that business ventures in Russia were too risky.
Based on the record, we find that petitioner was not
"carrying on a trade or business" during 1992. Rather, we find
that he was investigating potential trade opportunities. We
further find that the amounts paid by him during 1992 in
connection with his trade activity constitute "start-up
expenditures" which are only deductible over the 60-month period
beginning in the month in which an active trade or business
begins. Sec. 195(b)(1) and (c). We hold that petitioner is not
entitled to any deductions for his Schedule C trade or business
expenses for 1992 because his alleged business activity did not
rise to the level of an active trade or business during 1992.
Sec. 195.
The second issue for decision is whether petitioner is
entitled to a medical expense deduction for amounts claimed for
his special diet.
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