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R&D, we look to the facts and circumstances of the case. Of
course, we examine any and all contracts and agreements in the
record. See Kantor v. Commissioner, supra at 1519 (the
“agreements, and other facts which existed at that time,
sufficiently establish” that the taxpayer did not have the
objective intent of entering into a business); Levin v.
Commissioner, supra at 406. “[T]he ‘right question’ is ‘whether
the * * * [taxpayer] reasonably anticipated availing [itself] of
the privileges [it] possessed on paper.’” LDL Research & Dev. II,
Ltd. v. Commissioner, 124 F.3d 1338, 1345 (10th Cir. 1997)
(quoting Levin v. Commissioner, supra at 406), affg. T.C. Memo.
1995-172. We must examine “the expectations of the parties”.
Levin v. Commissioner, supra at 406. “The legal entitlement must
be backed by a probability of the firm’s going into business.
This ordinarily will be so only when it is in the venture’s
private interest to manufacture and sell any products that the
development effort produces.” Id. at 407. “Courts have
repeatedly held that while the probability of a firm’s going into
its own business will satisfy section 174, the mere possibility
of its doing so will not.” Kantor v. Commissioner, supra at
1520.
At the time petitioner incurred the R&D expenditures, he did
not have the objective intent to enter into a future business of
his own with the developed technology. Rather, petitioner’s
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