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the expenses specifically identified on the Schedule C are for
advertising, travel, meals, and entertainment. The legislative
history references costs for exploring potential markets and
products and “incurred in lining up prospective distributors,
suppliers or customers”. H. Rept. 96-1278, supra, 1980-2 C.B. at
712. Advertising and travel expenses are also expressly
highlighted. Id. Petitioners have failed to show that the
operations of Shrike Cars in 1998 had advanced beyond such
activities in the nature of exploration or preliminary
solicitation.
2. Comparisons to Caselaw
Both parties cite various cases that they maintain parallel
the factual circumstances at bar. Petitioners, for instance,
allege similarities to Cabintaxi Corp. v. Commissioner, 63 F.3d
614 (7th Cir. 1995), Blitzer v. Commissioner, 231 Ct. Cl. 236,
684 F.2d 874 (1982), and Lamont v. United States, 80 AFTR 2d 97-
7320, 97-2 USTC par. 50,861 (Fed. Cl. 1997). Respondent, in
contrast, emphasizes scenarios such as those in McKelvey v.
Commissioner, T.C. Memo. 2002-63, and Reems v. Commissioner, T.C.
Memo. 1994-253.
Petitioners rely on Cabintaxi Corp. v. Commissioner, supra,
for the proposition that “a business operation commences when the
entity starts to operate toward the goal of selling products”,
without regard to whether the operation is successful in
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