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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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