Kelvin & Arlene Jackson - Page 13




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          expenditure or use must have a high degree of probative value to            
          elevate such statement” to the level of credibility of a                    
          contemporaneous record.  Sec. 1.274-5T(c)(1), Temporary Income              
          Tax Regs., 50 Fed. Reg. 46016 (Nov. 6, 1985).                               
               C. Startup Expenditures                                                
               Pursuant to section 195(a), startup expenditures are not               
          generally deductible.  However, at the election of the taxpayer,            
          startup expenditures may be treated as deferred expenses and                
          amortized over at least a 60-month period beginning in the month            
          in which the active trade or business begins.  See sec.                     
          195(b)(1), (c).  Section 195(c) provides in part:                           
               The term “startup expenditure” means 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.                        
               The taxpayer must elect to amortize his or her startup                 
          expenditures.  Sec. 195(d).  Regulations promulgated under                  
          section 195 provide the time and manner for making such an                  







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