Wayne B. Bailey - Page 12




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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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