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therefore, not engaged in the conduct of the active trade or
business of being an author in 2001. Rather, respondent avers
that Mr. Deward’s expenses in performing research for the book he
hopes to write are “start-up expenditures” as defined in section
195(c)(1). Generally, no deduction is allowed for start-up
expenditures. Sec. 195(a).
Section 195(c)(1) defines “start-up expenditures” as:
(1) * * * any amount--
(A) paid or incurred in connection with--
(i) investigating the creation or
acquisition of an active trade or business,
or
(ii) creating an active trade or
business, or
(iii) any activity engaged in for profit
and for the production of income before the
day on which the active trade or business
begins, in anticipation of such activity
becoming an active trade or business, and
(B) which, if paid or incurred in connection
with the operation of an existing active trade or
business (in the same field as the trade or
business referred to in subparagraph (A)), would
be allowable as a deduction for the taxable year
in which paid or incurred.
As a general rule, the Commissioner’s determinations in the
notice of deficiency are presumed correct, and the burden of
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Last modified: November 10, 2007