- 7 -
State corporate charter possesses the attributes of a corporation
so as to be treated as one for Federal tax purposes. In this
case, however, we have before us an incorporated entity wishing
to disavow that form.
We shall not disregard a corporation for Federal tax
purposes if either (1) the corporation was formed for business
purposes, or (2) its creation is followed by the carrying on of
business activity. See Moline Properties, Inc. v. Commissioner,
319 U.S. 436 (1943). Petitioner's tax existence under Federal
law is established if either test is satisfied. See Carver v.
United States, supra at 236. Rarely is a corporation's tax
identity ignored, unless it is a sham. See Bennett Paper Corp.
v. Commissioner, 699 F.2d 450, 452 (8th Cir. 1983), affg. 78 T.C.
458 (1982); Strong v. Commissioner, 66 T.C. 12, 22 (1976), affd.
without published opinion 553 F.2d 94 (2d Cir. 1977).
Hooper and Chamblee argue that petitioner conducted no
business activity--that it merely held naked record title to the
property and therefore it "never [was] a business venture". We
disagree and find, under the second part of the Moline
Properties, Inc. test, that petitioner actually engaged in
business.2
2We offer no opinion as to whether the first part of the
test under Moline Properties, Inc. v. Commissioner, 319 U.S. 436
(1943), is also satisfied.
Page: Previous 1 2 3 4 5 6 7 8 9 10 Next
Last modified: May 25, 2011