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Commissioner, supra at 1520 (“our inquiry is limited to the tax
year in which a taxpayer incurs its research expenditure and
claims the section 174 deduction”); Diamond v. Commissioner, 930
F.2d 372, 374-375 (4th Cir. 1991), affg. 92 T.C. 423, 439 (1989);
Levin v. Commissioner, supra at 406 n.3 (“The tax treatment in
1979 depends on circumstances in 1979, not on what happened
later”).
“In order to qualify for the section 174 deduction, a
taxpayer’s existing or prospective business must be its own and
not that of another entity.” Kantor v. Commissioner, supra at
1519; see Levin v. Commissioner, supra; Green v. Commissioner,
supra. There is a distinction drawn in tax law between engaging
in one’s own business and investing in a business of another.
Kantor v. Commissioner, supra at 1519; see Whipple v.
Commissioner, 373 U.S. 193, 202 (1963); Higgins v. Commissioner,
supra at 218. When it appears “at the time of the research that
a taxpayer’s activities in connection with a new technology were
unlikely to amount to any more than those of an investor, courts
have denied the deduction.” Kantor v. Commissioner, supra at
1519; see Zink v. United States, supra; Spellman v. Commissioner,
supra; Levin v. Commissioner, supra; Diamond v. Commissioner,
supra; I-Tech R&D Ltd. Pship. v. Commissioner, supra.
To determine whether the taxpayer manifests the objective
intent to enter into a business of his own with the fruits of
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