-404-
of anything that could be commercially exploited in a trade or
business.” The Court surmised that virtually anything Newport
developed would constitute a “Patent Right”, and, if so, the
ownership of such improvement or technology would not be owned by
IRC.
There were other facts the Court discussed to support the
conclusion IRC was not engaged in a trade or business and did not
have the capability to engage in a trade or business. These
other findings are not seriously challenged by Kanter in the
instant cases, and the Court does not consider it necessary to
discuss those factors here.
Kanter was the only witness for petitioners with respect to
this issue. No documentary evidence was presented to corroborate
Kanter’s testimony. Kanter’s testimony was directed toward
establishing that there were certain rights or the ownership of
technology that IRC could acquire from the licensing agreement
with Newport that would not fall within the umbrella of the
“Patent Rights” exception existing in favor of Sloan-Kettering.
OPINION
A. Trade or Business Requirement of Section 174
Section 174(a)(1) provides:
A taxpayer may treat research or experimental
expenditures which are paid or incurred by him during
the taxable year in connection with his trade or
business as expenses which are not chargeable to
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