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as a going concern and performed those activities for which it
was organized.” Richmond Television Corp. v. United States, 345
F.2d 901, 907 (4th Cir. 1965), vacated and remanded on other
grounds 382 U.S. 68 (1965). An enterprise need not have
generated sales or other revenue to have begun to carry on a
business. Jackson v. Commissioner, 864 F.2d 1521, 1526 (10th
Cir. 1989), affg. 86 T.C. 492 (1986); Cabintaxi Corp. v.
Commissioner, 63 F.3d 614, 620 (7th Cir. 1995), affg. in part,
revg. in part, and remanding T.C. Memo. 1994-316. However, mere
research into or investigation of a potential business is
insufficient to demonstrate that a taxpayer is engaged in a trade
or business. Dean v. Commissioner, 56 T.C. 895, 902 (1971).
In the matter before us, petitioner was not actively engaged
in the trade or business of the retail aspect of the Tasha’s Cafe
concept. Petitioner never obtained the necessary licenses,
materials, or inventory for the retail business, established a
retail location, or held out any goods for sale.
However, the record before us establishes that petitioner
was actively engaged in the trade or business of selling
franchises of the Tasha’s Cafe concept. Petitioner developed
detailed plans for the operation and appearance of a Tasha’s Cafe
location. Based on his analysis of the model in his basement,
petitioner determined the materials and design elements to be
used for outfitting a Tasha’s Cafe location. Most importantly,
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