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ASK Properties to file Federal income tax returns from 1991 to
1994 representing that it was the owner and operator of the
Fresno property. Therefore, ASK Properties has sufficient
business activities to require its recognition for Federal income
tax purposes.
An agency relationship exists when the facts indicate that
the corporation carried out only “the normal duties of an agent.”
National Carbide Corp. v. Commissioner, 336 U.S. 422, 437 (1949).
The same facts that establish sufficient business activities
indicate that ASK Properties held itself out as operating the
Fresno property in its own name and for its own account.
We also conclude that the business purpose of forming ASK
Properties, to protect its shareholders from personal tort
liability, is a valid business purpose. See Moline Properties v.
Commissioner, supra; Doe v. Commissioner, supra. Thus,
petitioners do not meet the limited exceptions set forth in
Commissioner v. Bollinger, supra, and they cannot disavow the
corporate existence and elect to have the corporation disregarded
for tax purposes.
Petitioners’ next argument is that they were misled by
respondent during the years in issue because respondent did not
challenge their 1991 and 1992 tax returns. In 1991 and 1992,
petitioners owned 25 percent of the outstanding shares of ASK
Properties. Petitioners included one-fourth of the Great
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