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business of the corporation must be considered separately from
the trade or business of the shareholders.” Markwardt v.
Commissioner, 64 T.C. 989, 995 (1975).
Gleave testified that the December 1980 $17,500 Kenmore
check to Amherst Delta, Inc., was “the deposit from 747 [Kenmore]
to the landlord, if I recall, for Eggertsville Inn”, which was
“an investment of” Kenmore. However, (1) Gleave’s August 2,
1982, bankruptcy filing shows him (not Kenmore) as owner of
Eggertsville Inn, Inc.; (2) Kenmore’s August 3, 1982, bankruptcy
filing shows Kenmore not owning any corporate stock and not
otherwise owning any interest in Eggertsville Inn, Inc.; (3)
Kenmore’s fiscal 1981 tax return balance sheet shows that Kenmore
did not own any corporate stock at all; and (4) Gleave told the
IRS auditor that the $17,500 check was for a tavern that Gleave
had an option to buy. We conclude, and we have found contrary to
Gleave’s testimony, that Kenmore did not own an interest in
Eggertsville Inn, Inc. In addition, we conclude, and we have
found, that the $500 LoTempio & Brown payment was in connection
with Gleave’s buying Eggertsville Inn, Inc. This $500 was a
capital expenditure, to be added to Gleave’s basis in
Eggertsville Inn, Inc., and was not currently deductible by
Gleave or by Kenmore.
Petitioners do not contend that the $500 LoTempio & Brown
payment was deductible by Kenmore for any alternative reason,
e.g., as compensation to Gleave, and so we do not consider
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