- 16 - 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 thePage: Previous 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Next
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