- 6 -
brochure, the name of petitioner’s corporation was shortened to
Systems, Inc. (SI). The brochure states that SI designed and
produced the sprinkler system.
Respondent disallowed all Schedule C expenses for both years
and contended that the claimed expenses belong to CCSI and not
petitioner.
Discussion
Pursuant to section 162, a deduction is allowed for “all the
ordinary and necessary expenses paid or incurred during the
taxable year in carrying on any trade or business”. In order to
be deductible, business expenses generally must be the expenses
of the taxpayer claiming the deduction. Gantner v. Commissioner,
91 T.C. 713, 725 (1988), affd. 905 F.2d 241 (8th Cir. 1990);
Hewett v. Commissioner, 47 T.C. 483, 488 (1967). For tax
purposes, a corporation is treated as a separate entity from its
shareholders. Moline Properties, Inc. v. Commissioner, 319 U.S.
436, 438-439 (1943). Furthermore, a shareholder is not entitled
to a deduction from his individual income for his payment of
corporate expenses. Deputy v. duPont, 308 U.S. 488, 494 (1940);
Gantner v. Commissioner, supra. Shareholders cannot deduct as
personal expenses such expenses that further the business of the
corporation. Leamy v. Commissioner, 85 T.C. 798, 809 (1985).
Petitioner stated that he paid all the claimed expenses.
Petitioner is an officer and shareholder of CCSI, and both
Page: Previous 1 2 3 4 5 6 7 8 9 10 11 Next
Last modified: May 25, 2011