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all the facts and circumstances, and “more weight must be given
to the objective facts than to the taxpayer’s mere after-the-fact
statements of intent.” Drobny v. Commissioner, 86 T.C. 1326,
1341 (1986). There are virtually no objective facts in the
record to indicate the requisite intent.
Second, there is no evidence to show that petitioner husband
was regularly and actively involved in this activity. The fact
that he earned $180,326 in wages in 1994 strongly suggests that
he was regularly and actively involved in his employment for The
Application Group, rather than for Transnet.
Finally, there is no evidence to support a finding that
Transnet had actually commenced business operations when the
claimed deductions were incurred. Preopening and startup
expenses are not deductible under either section 162 or section
212. See Hardy v. Commissioner, 93 T.C. 684, 687 (1989).
Even if we assume, arguendo, that petitioners were engaged
in a trade or business with respect to Transnet in 1994,
petitioners have failed to establish that they are entitled to
deductions under section 162 in excess of the $15,535 that
respondent has already allowed.
Petitioners bear the burden of showing their entitlement to
the claimed deductions. See Norgaard v. Commissioner, 939 F.2d
874, 877 (9th Cir. 1991). Taxpayers are required to maintain
records sufficient to enable the Commissioner to determine the
taxpayer’s correct tax liability. See sec. 6001; Meneguzzo v.
Commissioner, 43 T.C. 824, 831-832 (1965). Except in the case of
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