Saykally

MEMORANDUM **

David M. Saykally 1 appeals from the U.S. Tax Court’s judgment that he was not entitled to a current deduction for research and development (“R&D”) expenses *915 under I.R.C. § 174. As the facts and procedural posture of this case are known to the parties, we repeat them here only as necessary.

For the reasons well-stated in its opinion, we conclude that the Tax Court did not err in holding that Saykally was not entitled to a deduction for R&D expenses under I.R.C. § 174. See Kantor v. Comm’r, 998 F.2d 1514, 1518 (9th Cir.1998). We have held that R&D expenses are not deductible under I.R.C. § 174 unless a taxpayer demonstrates a “ ‘realistic prospect’ of subsequently entering its own business in connection with the fruits of the research” by manifesting (1) the “objective intent” to enter such a business, and (2) the “capability of doing so.” Kantor, 998 F.2d at 1518 (citations omitted) (emphasis added). Saykally failed to demonstrate that he possessed the requisite objective intent at the time he incurred the R&D expenses. The record before us plainly indicates that Saykally engaged in the R&D efforts to create technology which could be licensed to another entity…