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pre-startup expenses since they have not been shown to relate to
the future commencement of any specific trade or business) as
section 162(a) ordinary and necessary business expenses,
deductible on Schedule C.
We have sustained the tax deficiency for 1997 on the basis
of caselaw (including decisions of this Court) holding that
section 162(a) applies only to the expenses of an operating
business. It is clear, however, that the courts have not acted
uniformly in dealing with the issue of whether and in what
circumstances preoperating expenses may be treated as currently
deductible business expenses. In some cases (contrary to the
above-cited decisions of this Court) courts have permitted a
section 162(a) business expense deduction for preoperating
expenses. See, e.g., 379 Madison Ave., Inc. v. Commissioner, 60
F.2d 68 (2d Cir. 1932) (a net loss attributable to rent, real
estate taxes, and interest paid during the construction of a
building first ready for occupancy by tenants in a subsequent
taxable year held deductible as part of a net loss from a
“business regularly carried on”), revg. and remanding 23 B.T.A.
29 (1931); Blitzer v. United States, 47 AFTR 2d 81-1005, at 81-
1019, 81-1 USTC par. 9262, at 86,633 (Ct. Cl. 1981) (in dicta,
the court states that preoperating expenses that are recurring in
nature and do not provide benefits extending beyond the taxable
year may be deductible under section 162); United States v. Manor
Care, Inc., 490 F. Supp. 355, 362 (D. Md. 1980) (preoperating
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