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Respondent argues that the business was a corporation and
its losses may not be taken on petitioners' individual tax
return, that because the business was not an ongoing business,
research into a future business is not a deductible loss, and
that petitioner failed to substantiate the claimed expenses.
Because we agree with respondent as to the first contention, we
need not address respondent's other arguments.
Usually, an individual may not claim the deductions of a
corporation. Moline Properties v. Commissioner, 319 U.S. 436
(1943). Payments made by a shareholder to his corporation or a
third person for the benefit of the corporation are neither
deductible business expenses of the shareholder nor expenses
incurred for the production of income. Markwardt v.
Commissioner, 64 T.C. 989, 995 (1975). Such payments are treated
as contributions to capital by the shareholder and must be
regarded as an additional cost of the stock. Id. A deduction
is allowable only if the expenditures are made to protect or
promote the shareholder's own trade or business. Id. The trade
or business of the corporation must be considered separately from
the trade or business of the shareholder. Id. The corporate
form may be disregarded where it is a sham or unreal. Moline
Properties v. Commissioner, supra at 439.
In this case, petitioner did not operate any trade or
business on his own. The only business he was involved with was
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