- 7 - parties agree that CCSI was an active corporation during the years at issue. CCSI was created to produce and market the sprinkler system, and petitioner transferred all equipment related to the sprinkler system to CCSI. Thus every expense related to the sprinkler system is an expense of CCSI, even if petitioner paid the expense. Furthermore, the fact that the expenses were deducted on CCSI’s return when CCSI had income shows that the expenses are those of CCSI. Petitioner cannot shift expenses back and forth depending on where the income was. CCSI is an entity separate from petitioner. Moline Properties, Inc. v. Commissioner, supra. Since petitioner did not file a Schedule C with his 1995 joint return, we assume that 1995 was the year for which CCSI claimed expenses on its return. Petitioner held out CCSI as the producer of the sprinkler system, and, by incurring these expenses, petitioner was furthering the business of CCSI. Leamy v. Commissioner, supra. Therefore, we find that the expenses properly belong to CCSI and not petitioner.5 5 Respondent has not raised the issue of whether any of the expenses were nondeductible, preopening expenses. Richmond Television Corp. v. United States, 345 F.2d 901, 907 (4th Cir. 1965), vacated and remanded per curiam on other grounds 382 U.S. 68 (1965). Given that neither CCSI nor petitioner had sufficient investors, any plans or facilities for manufacturing the product, nor any staff for sales of the product, this issue would otherwise seem to be applicable.Page: Previous 1 2 3 4 5 6 7 8 9 10 11 Next
Last modified: May 25, 2011