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the 1993 tax return reported adjusted gross income of $84,484,
which included farm losses on Schedule F of $20,220.
OPINION
Our task herein is to determine whether petitioner operated
her cattle-ranching activities as a sole proprietor or through
Spirit Horse Ranch during the years in issue. If we decide that
petitioner ran the business as a sole proprietor, then petitioner
is entitled to deduct the losses from the cattle-ranching
activities on her Federal income tax returns.
Petitioner contends that she formed Spirit Horse Ranch in
order to own the cattle ranch with Mr. James. She reasons Spirit
Horse Ranch's corporate form should be disregarded because (1) Mr.
James failed to make capital contributions to the entity, (2) no
stock was ever issued, and (3) no Federal corporate income tax
returns or New Mexico franchise tax reports were ever filed.
Additionally, petitioner asserts that the only reason she used the
corporate checking accounts was that she "hated to pay money for
checks and not use them".
Generally, a corporation organized for the purpose of carrying
on business activity constitutes a separate taxable entity. Moline
Properties, Inc. v. Commissioner, 319 U.S. 436, 439 (1943); New
Colonial Co. v. Helvering, 292 U.S. 435, 442 (1934). Once the
taxpayer has elected to conduct his business affairs in corporate
form, the taxpayer must accept the tax disadvantages of that form.
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