Julie A. Toth - Page 8

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          section 162 activity must be capitalized.  See Sorrell v.                   
          Commissioner, 882 F.2d 484, 487-488 (11th Cir. 1989), revg. T.C.            
          Memo. 1987-351; Lewis v. Commissioner, 861 F.2d 1232, 1233 (10th            
          Cir. 1988), revg. T.C. Memo. 1986-155; Fishman v. Commissioner,             
          837 F.2d 309 (7th Cir. 1988), revg. T.C. Memo. 1986-127; Johnsen            
          v. Commissioner, 794 F.2d 1157, 1162 (6th Cir. 1986), revg. 83              
          T.C. 103 (1984); Aboussie v. United States, 779 F.2d 424, 428 n.6           
          (8th Cir. 1985).  The Court of Appeals for the Ninth Circuit                
          affirmed a holding of the Tax Court which found preopening                  
          expenditures of a section 212 activity could be deducted.                   
          Hoopengarner v. Commissioner, 80 T.C. 538 (1983), affd. without             
          published opinion 745 F.2d 66 (9th Cir. 1984).8                             












               7(...continued)                                                        
          as a loss when the asset was sold.  See Commissioner v. Idaho               
          Power Co., 418 U.S. 1 (1974).                                               
               8 In Hardy v. Commissioner, 93 T.C. 684, 693 (1989), affd.             
          in part and remanded in part (10th Cir., Oct. 29, 1990), we                 
          overruled our Opinion in Hoopengarner v. Commissioner, 80 T.C.              
          538 (1983), affd. without published opinion 745 F.2d 66 (9th Cir.           
          1984).  The year in suit in Hardy was 1982, to which the 1984               
          amendment of sec. 195 did not apply.                                        




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