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of business activity and the corporation carries on no business
activity. Id.; Shaw Constr. Co. v. Commissioner, 35 T.C. 1102,
1113-1114 (1961), affd. 323 F.2d 316 (9th Cir. 1963). A
corporation that originally had a business purpose or that once
engaged in business activity may also be disregarded, if the
corporation subsequently becomes inactive and no longer has a
business purpose. See Owens v. Commissioner, 568 F.2d 1233, 1239
(6th Cir. 1977), affg. in part and revg. in part on another
ground 64 T.C. 1 (1975); Lowndes v. United States, 384 F.2d 635
(4th Cir. 1967).
When Mr. Riopelle owned the shares of Landtrak, Landtrak
provided engineering consulting services and filed Forms 1120,
U.S. Corporation Income Tax Return. It therefore appears that
Landtrak had a business purpose and engaged in business activity
during Mr. Riopelle’s ownership.
Petitioners claim that Landtrak also had a business purpose
and engaged in business activity after Mr. Riopelle’s ownership
ended. According to Mr. Comey, after Landtrak’s stock had been
issued to Mrs. Comey, Landtrak financed the development of, and
attempted to obtain intellectual property protection for, certain
devices that Mr. Comey claims to have invented. Mr. Comey
further claims that Landtrak used the proceeds of sale of the
Capital Fund shares for this purpose.
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