Sharon D. Kantor, Robert E. Kantor v. Commissioner of Internal Revenue

HUG, Circuit Judge:

This case presents the question of whether research expenditures made by a partnership in order to develop a new technology were incurred in connection with its own trade or business, within the meaning of 26 U.S.C. § 174, where the partnership had contracted another firm to conduct the research and had granted that firm the opportunity to obtain for a nominal sum the exclusive right to market the technology. The Tax Court held they were not, and thus were not deductible as current expenses. We affirm this determination. The appellants also contend that the Tax Court lacked…