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3Petitioner concedes that some of the meal expenses were not
related to Cilena and further that the meal expenses attributable to
Cilena must be reduced. Accordingly, the meal expenses at issue are
$36.
On February 3, 1999, respondent issued a notice of
deficiency for the year 1993 disallowing petitioner’s entire
business loss. Petitioner timely filed a petition to this Court
seeking a redetermination. In his amended answer to the
petition, respondent asserted that petitioner’s 1993 business
loss was subject to the passive activity loss limitations of
section 469.
OPINION
I. Trade or Business of Leasing Equipment
The notice of deficiency disallowed petitioner’s deductions
for a variety of reasons, one of which was that petitioner did
not establish that he was in the trade or business of leasing
equipment. Respondent did not make this argument in his original
brief and only alluded to it in his reply brief.8
Based on the evidence in the record, we hold that petitioner
engaged in the trade or business of leasing equipment with the
primary purpose of making a profit. See Commissioner v.
Groetzinger, 480 U.S. 23, 35 (1987); Wolf v. Commissioner, 4 F.3d
709, 713 (9th Cir. 1993), affg. T.C. Memo. 1991-212; Warden v.
Commissioner, T.C. Memo. 1995-176, affd. without published
8Respondent has not challenged whether the provision of
consulting services and operation of a portable clean room were
trade or business activities of petitioner.
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