- 16 -
Memo. 2002-63, affd. 76 Fed. Appx. 806 (9th Cir. 2003); McManus
v. Commissioner, supra.
Stated otherwise, mere research into or investigation of a
potential business is insufficient. Dean v. Commissioner, 56
T.C. 895, 902 (1971); McKelvey v. Commissioner, supra. Thus,
while it is true that an enterprise need not have generated sales
or other revenue to have begun to carry on a business, it must
nonetheless have started to function in a particular and
identifiable line of work. Cabintaxi Corp. v. Commissioner, 63
F.3d 614, 620-621 (7th Cir. 1995), affg. in part, revg. in part,
and remanding T.C. Memo. 1994-316; Jackson v. Commissioner, supra
at 1526 & nn.7-8; Blitzer v. Commissioner, 231 Ct. Cl. 236, 684
F.2d 874 (1982).
B. Analysis
Evaluation of whether Shrike Cars constituted an active and
ongoing trade or business in 1998 is complicated by the ambiguity
in the record with respect to (1) the specific nature of the
business in which Shrike Cars engaged and (2) the relationship of
Shrike Cars to petitioners’ other business endeavors. This
confusion is in part the result of the business decisions of
petitioners to conduct some activities through their separate S
corporation, Marking Concepts Group, Inc., and others through
their two Schedule C proprietorships. Critically, however,
Page: Previous 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 NextLast modified: May 25, 2011