- 5 -
Discussion
Deductions are allowed under section 162 for the ordinary
and necessary expenses of carrying on an activity which
constitutes the taxpayer's trade or business. Deductions are
allowed under section 212 for expenses paid or incurred in
connection with an activity engaged in for the production or
collection of income, or for the management, conservation, or
maintenance of property held for the production of income.
To be engaged in a trade or business within the meaning of
section 162, “the taxpayer must be involved in the activity with
continuity and regularity” and “the taxpayer's primary purpose
for engaging in the activity must be for income or profit.”
Commissioner v. Groetzinger, 480 U.S. 23, 35 (1987). In
addition, the taxpayer’s business operations must actually have
commenced. See Thomason v. Commissioner, T.C. Memo. 1997-480;
Scagliotta v. Commissioner, T.C. Memo. 1996-498; McManus v.
Commissioner, T.C. Memo. 1987-457, affd. per curiam without
published opinion 865 F.2d 255 (4th Cir. 1988). An examination
of the facts and circumstances of each case is necessary to
determine whether a taxpayer is carrying on a trade or business.
See Commissioner v. Groetzinger, supra at 36.
It is unclear on what basis respondent determined that
petitioners’ activity with respect to Solarsys did not constitute
a business in 1995. Upon consideration of all the evidence in
Page: Previous 1 2 3 4 5 6 7 8 9 10 Next
Last modified: May 25, 2011