BAILEY v. COMMISSIONER OF INTERNAL REVENUE
T.C. Memo. 2012-96
United States Tax Court.
Filed April 2, 2012.
If the expenditures were start-up expenditures of a business, then they are not currently deductible. Section 195(a) generally disallows a current deduction for start-up expenditures, and there is no evidence that Mr. Bailey made the election under section 195(b) that would have entitled him to amortize his start-up expenditures over 180 months. Section 195(c)(1) defines "start-up expenditure" to mean
(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.