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consideration arose, in great part, after petitioner had settled
the litigation and was entitled to continue operating the bingo
business. Finally, where there has been substantial business
activity by a corporation, it would be difficult to show that the
corporation is a taxpayer’s alter ego or merely a nominee for
purposes of Federal taxation. See Moline Properties, Inc. v.
Commissioner, 319 U.S. 436, 438-439 (1943); National Carbide
Corp. v. Commissioner, 336 U.S. 422 (1949); Commissioner v.
State-Adams Corp., 283 F.2d 395 (2d Cir. 1960). Although
petitioner was a shill or front for the Lichtys and others,
November was an active and operating entity that, in the course
of conducting the bingo business, received income and issued
checks for bingo business expenditures. Moreover, November was a
named plaintiff in the legal proceeding with the Lichtys.
November played too large and vital a role to be disregarded.
We proceed to consider whether petitioner has shown that
respondent’s determination disallowing certain of November’s
deductions was in error. We first consider the 1991 legal fee
that was incurred in connection with litigation involving the
bingo operation. November originally claimed a $1 million
deduction with respect to the $1.5 million fee for which an
agreement and note were executed with/to Attorney Krieger.
Petitioner contends that the entire $1.5 million fee should be
deductible by an accrual basis taxpayer because it was an
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