- 10 -
respondent argues that petitioner did not have ownership in the
bingo operation prior to the settlement of the lawsuit, neither
party, prior to the submission of the briefs, contended that
November should be disregarded as an entity. Under these
circumstances, petitioner’s attempt, for the first time on brief,
to disavow the existence of November would be most prejudicial to
respondent and will not be permitted. See, e.g., Estate of
Horvath v. Commissioner, 59 T.C. 551, 556 (1973).
Even if petitioner had been permitted to pursue his
contention that the corporate entity be disregarded, on the
record here he would have failed.4 Petitioner created this
corporate entity, caused it to file returns, and reported
passthrough losses from the entity on his individual return. In
addition, the existence and form of the S corporation had not
been questioned by respondent. Importantly, the existence of
November is in no way dependent upon whether it or petitioner had
an ownership interest in the bingo operation. November was the
financial conduit for petitioner’s involvement in the bingo
business, whether or not he or November had an ownership interest
in the bingo business. Additionally, the deficiencies under
4 A party seeking to disavow the form of its own transaction
may be required to present “strong proof” that the substance
differs from the form. Ullman v. Commissioner, 264 F.2d 305, 308
(2d Cir. 1959), affg. 29 T.C. 129 (1957); Coleman v.
Commissioner, 87 T.C. 178, 202 (1986), affd. without published
opinion 833 F.2d 303 (3d Cir. 1987).
Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Next
Last modified: May 25, 2011