- 8 -
expenditures.” Section 195(c)(1) defines “start-up expenditure”
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.[6]
Petitioner’s activities in 2002 with relation to ASIL
Investments were, at best, start-up activities and did not amount
to an active trade or business. Accordingly, we hold that
6 Sec. 195(c)(1) provides that the term “start-up
expenditure” does not include expenditures for which a deduction
would be allowable under sec. 163(a) (interest), 164 (taxes), or
174 (research and experimental expenses). See TSR, Inc. & Sub.
v. Commissioner, 96 T.C. 903 (1991) (explaining that the phrase
“research or experimental” for purposes of sec. 174 refers to
scientific or technological research); see also sec. 1.174-2(a),
Income Tax Regs. None of the expenditures listed on petitioner’s
Schedules C were allowable under these sections.
Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 Next
Last modified: March 27, 2008