Cane Creek Sportsman's Club, Inc. - Page 5

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          last annual report was filed with Alabama's secretary of state's            
          office.  The sale, in 1993, was reported on petitioner's Federal            
          income tax return, showing no gain because petitioner reported              
          both the sales price and adjusted basis of the property as                  
          $33,730.  During its life, petitioner did not rent or lease the             
          property to others.  It did not keep books, maintain a bank                 
          account, or hold regular meetings.  Using personal checks and               
          cash, petitioner's shareholders covered the expenditures for                
          repairs and improvements made on the property.                              
               Respondent determined in the notice of deficiency that                 
          petitioner must include the gain of $112,053 from the sale of the           
          property in its 1993 income but that it was entitled to deduct an           
          unused loss carryover from 1992 of $9,290.                                  
               Respondent's determination that petitioner must report its             
          realized gain on the 1993 sale of property is presumed to be                
          correct, and petitioner has the burden of proving otherwise.                
          Rule 142(a); Welch v. Helvering, 290 U.S. 111, 114 (1933).                  
               Hooper and Chamblee, as officers of petitioner, argue that             
          they did not intend to incorporate petitioner and did not know,             
          until 1995, that a lawyer friend had, in fact, incorporated it.             
          They contend that petitioner was not a business venture, and its            
          corporate existence should therefore be disregarded.                        
               State law determines whether a corporation has been                    
          organized.  See Stoody v. Commissioner, 66 T.C. 710, 716 (1976);            

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