- 19 -
1975); Williams v. Commissioner, 627 F.2d 1032, 1034 (10th Cir.
1980), affg. T.C. Memo. 1978-306.
There is no dispute as to the Stables' gross receipts from
the purses won by its horses. Respondent estimated the Stables'
expenses and deductions from third-party sources, no evidence of
which was presented. Respondent attributed all of the resulting
net income ($16,022.84) to petitioner. Petitioner is correct
that respondent did not allow for all of the Stables' expenses in
that fees for one of the trainers were not included. However,
petitioner is not before this Court on behalf of the Stables to
contest its liability, but in his individual capacity; thus, we
need not address the correct amount of the Stables' taxable
income.6
There is no evidence that petitioner received an actual or
constructive distribution from the Stables. Respondent has not
alleged that the Stables was a sham corporation so that its
existence as a separate legal entity should be ignored. We find
that the Stables was organized for the business purpose of racing
horses and did race its horses. The Stables' income should not
be attributed to petitioner as dividend income.
Petitioner has argued that he is entitled to a loss for his
share of the Stables which Singer "stole" from him. Section
6 In some cases, taxpayers must establish the correct amount
of a corporation's earnings and profits in order to show that the
distribution received was a return of a capital contribution
rather than a dividend. However, this is not such a case.
Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Next
Last modified: May 25, 2011