Paul D. and Gudrun G. Weaver - Page 12

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          if it is normal or customary within a particular trade, business,           
          or industry.  Deputy v. du Pont, 308 U.S. 488, 495 (1940).  An              
          expense is necessary if it is appropriate and helpful for the               
          development of the business.  Commissioner v. Heininger, 320 U.S.           
          467, 471 (1943).                                                            
               Implicit in the foregoing definitions is the concept that a            
          taxpayer must in fact be “carrying on” a trade or business for              
          expenditures to be deductible under section 162.  This limitation           
          is made explicit in section 195, as follows:                                
               SEC. 195.  START-UP EXPENDITURES.                                      
                    (a) Capitalization of Expenditures.--Except as                    
               otherwise provided in this section, no deduction shall                 
               be allowed for start-up expenditures.                                  
                    (b) Election To Amortize.--                                       
                         (1) In general.--Start-up expenditures may,                  
                    at the election of the taxpayer, be treated as                    
                    deferred expenses.  Such deferred expenses shall                  
                    be allowed as a deduction prorated equally over                   
                    such period of not less than 60 months as may be                  
                    selected by the taxpayer (beginning with the month                
                    in which the active trade or business begins).                    
                         (2) Dispositions before close of amortization                
                    period.--In any case in which a trade or business is              
                    completely disposed of by the taxpayer before the end             
                    of the period to which paragraph (1) applies, any                 
                    deferred expenses attributable to such trade or                   
                    business which were not allowed as a deduction by                 
                    reason of this section may be deducted to the extent              
                    allowable under section 165.                                      
                    (c) Definitions.--For purposes of this section--                  
                         (1) Start-up expenditures.--The term “start-                 
                    up expenditure” means any amount--                                






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