-409-
instant cases and could be considered in resolving the IRC issues
for 1979. The Court does not construe the parties’ stipulation
to limit the evidence here to only those portions of the Estate
of Cook evidentiary record that petitioners, in their sole
opinion, considered “relevant” to IRC and Kanter.
On this record, respondent has established that Kanter is
not entitled to deduct research and development expenses for 1979
under section 174(a). The evidence establishes that there was no
realistic prospect of IRC’s entering into a trade or business to
exploit the technology relating to the NPT-15392 compound being
developed under the IRC-Newport research/licensing agreement.
Simply put, there was little, if anything, IRC could acquire from
the deal since virtually anything that Newport developed would
almost certainly be a patentable property right that could not be
owned by IRC.
As this Court previously noted in Estate of Cook v.
Commissioner, T.C. Memo. 1993-581: (1) The broad definition of
the term “patent rights”, as defined in the March 28, 1978,
agreement between Newport and Sloan-Kettering, made it virtually
impossible for IRC to acquire ownership of anything that could be
commercially exploited in a trade or business; (2) the existence
of the IRC Shareholders-Newport put/call agreement made it
extremely unlikely IRC would ever be able to use, in a trade or
business, the research Newport conducted because (a) if the
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