Kandiah and Nalini Jeyapalan - Page 7




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          of the taxpayers, or the purpose of creating the corporation was            
          not a business purpose.  See Commissioner v. Bollinger, 485 U.S.            
          340, 344-347 (1988).  None of these exceptions apply here.                  
               In Skarda v. Commissioner, 27 T.C. 137 (1956), affd. 250               
          F.2d 429 (10th Cir. 1957), a taxpayer claimed that a corporation,           
          which had previously been operated as a partnership, should be              
          disregarded because no corporate activities such as shareholder             
          meetings, adoption of bylaws, elections of officers, preparation            
          of minutes, issuance of stock, or transfers of title to property            
          by the partnership to the corporation had ever occurred.  The               
          taxpayer had filed articles of incorporation, and a certificate             
          of incorporation was issued.  The business activity of the                  
          corporation was limited to the publication of a newspaper,                  
          maintenance of a checking account, setting up books that                    
          reflected a capital stock account, the receipt of supplies, and             
          the extension of credit.  This Court concluded that, even though            
          corporate formalities were not adhered to, the entity held itself           
          out to the public as a corporation and conducted some business in           
          the ordinary meaning.  See id. at 145.  Therefore, the corporate            
          entity could not be disregarded.                                            
               In Doe v. Commissioner, T.C. Memo. 1993-543, affd. in part             
          and revd. in part on other grounds 116 F.3d 1489 (10th Cir.                 
          1997), taxpayers, who owned stock in a corporation that managed a           
          bar and bowling alley, sought to disregard their S corporation              





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