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and use of Russian airplanes. In addition, no party has
contended that Quotum’s corporate existence must be disregarded.
Although we have found that James transferred substantial
funds to or on behalf of Quotum and paid some corporate expenses
personally, the fact that James supplied funds to pay Quotum’s
expenses and finance its operations does not make his investment
or the expenses that he paid deductible by him. See Whipple v.
Commissioner, 373 U.S. 193 (1963); Weigman v. Commissioner, 47
T.C. 596, 606 (1967), affd. per curiam 400 F.2d 584 (9th Cir.
1968).
In Whipple v. Commissioner, supra, the Supreme Court held
that a taxpayer’s advances to one of a number of corporations he
owned did not result in a deductible business bad debt under
section 166 because the advances were not related to the
taxpayer’s trade or business (in contrast to the trade or
business of the taxpayer’s corporation). The Supreme Court’s
reasoning in Whipple is instructive:
Devoting one’s time and energies to the affairs of
a corporation is not of itself, and without more, a
trade or business of the person so engaged. Though
such activities may produce income, profit or gain in
the form of dividends or enhancement in the value of an
investment, this return is distinctive to the process
of investing and is generated by the successful
operation of the corporation’s business as
distinguished from the trade or business of the
taxpayer himself. When the only return is that of an
investor, the taxpayer has not satisfied his burden of
demonstrating that he is engaged in a trade or business
since investing is not a trade or business and the
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