- 259 -
Helvering, supra. The question whether a corporation is genuine
or a sham is one of fact. See Noonan v. Commissioner, 451 F.2d
992, 993 (9th Cir. 1971), Shaw Constr. Co. v. Commissioner, 323
F.2d 316, 321 (9th Cir. 1963).
In Moline Properties, Inc. v. Commissioner, supra at 438-
439, the Supreme Court established the following test for
determining whether a corporation will be recognized as a
separate taxable entity:
The doctrine of "corporate entity" fills a useful
purpose in business life. Whether the purpose be to
gain an advantage under the law of the state of
incorporation or to avoid, or to comply with the
demands of creditors or to serve the creator's personal
or undisclosed convenience so long as that purpose is
the equivalent of business activity or is followed by
the carrying on of business by the corporation, the
corporation remains a "separate taxable entity". * *
* [Fn. refs. omitted.]
Thus, if the corporations were organized for substantial business
purposes, or actually engaged in substantial business activities,
their corporate forms must be recognized for tax purposes.
To be recognized, a corporation must be organized for a
substantial "business" purpose in the ordinary meaning. See
National Investors Corp. v. Hoey, 144 F.2d 466, 468 (2d Cir.
1944). "[E]scaping taxation is not 'business' in the ordinary
meaning". Id. Thus, a corporation organized for the purpose of
avoiding tax is not organized for substantial business purposes.
It is clear from the evidence in these cases that the
multiple corporations, as well as the trusts and partnerships,
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