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Tax Matters

Please note: This item is from our archives and was published in 1999. It is provided for historical reference. The content may be out of date and links may no longer function.

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No Transaction Equals No Deduction

A CPA traveled to Russia to investigate business opportunities. He deducted expenses of $21,000 on his tax return for the trip. The Tax Court held that he was not “carrying on a trade or business.” The court concluded the CPA was investigating “potential trade” opportunities rather than engaging in trade activities because it found no evidence of completed business transactions. The deduction was disallowed and treated as a start-up expense. ( Massa v . Commissioner, TC Memo, 1999-63).

— Michael Lynch, CPA, Esq., professor of tax accounting at
Bryant College, Smithfield, Rhode Island.