Richard C. and Hattie M. Martin - Page 12




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          a business activity does not depend upon the quantum of business            
          activity but simply whether the entity engaged in some business             
          activity.  See Dooley v. Commissioner,  T.C. Memo. 1984-548 (citing         
          Britt v. United States, 431 F.2d 227 (5th Cir. 1970)); see also             
          Hospital Corp. of Am. v. Commissioner, 81 T.C. 520, 579-580 (1983);         
          Reed v. Commissioner, T.C. Memo. 1997-533.                                  
               Petitioners point to Blue Flame Gas Co. v. Commissioner, 54            
          T.C. 584 (1970), as factually similar to the case herein.  We               
          disagree.  At the time the taxpayers filed articles of                      
          incorporation in Blue Flame, they operated as a partnership.  No            
          property was contributed to the corporation, no business was                
          conducted, and the corporation was subsequently abandoned.  We              
          therein concluded that the losses were produced by the partnership.         
          See id. at 599.  The facts herein are clearly distinguishable from          
          those in Blue Flame.  Moreover, the taxpayer in Blue Flame "did not         
          seek the protective shield of corporate existence against business          
          creditors", id. at 600, in sharp contrast to what happened here.            
               In sum, the losses resulting from the manufacture of                   
          crankshafts for race cars during the years in issue are those of            
          Cola, Inc., and not those of petitioners.  Consequently,                    
          petitioners are not entitled to deduct those losses on their                
          respective individual Federal income tax returns.                           








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