Brief Fact Summary. Petitioners incurred travel and legal expenses in pursuing their goal of owning and operating a newspaper. They attempted to deducted these expenses as business expenses.
Synopsis of Rule of Law. Ordinary and necessary expenses incurred in connection with a trade or business may be deducted.
The expenses of investigating and looking for a new business and trips preparatory to entering a business are not deductible as an ordinary and necessary business expense incurred in carrying on a trade or business.View Full Point of Law
Issue. Are Petitioners entitled to deduct traveling expenses and legal fess?
Held. Judge Van Fossan issued the opinion for the Tax Court in holding that Petitioners may not deduct the expense because they were not incurred in connection with a trade or business.
Discussion. The expenses were preparatory in nature and not related to a current business. The rule contemplates an existing business, not a contemplated one.