Leon and Mamie M. Gaither - Page 8




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          corporation is not entitled to deductions for business expenses             
          of the corporation because the trade or business of the                     
          corporation is considered separate and distinct from the trade or           
          business of the shareholder.  See Moline Props., Inc. v.                    
          Commissioner, 319 U.S. 436, 438-439 (1943); Deputy v. duPont, 308           
          U.S. 488, 495 (1940).                                                       
               While we are not exactly sure of what arrangements were in             
          effect between petitioner (doing business through G&A) and PSI,             
          we are satisfied that in some manner they split the fees or                 
          profits generated by the business activities described above.               
          We cannot tell with any degree of precision what expenses should            
          properly be considered expenses of G&A, and therefore deductible            
          on the Schedules C, and what expenses should properly be                    
          considered expenses of PSI, and therefore not deductible at all             
          by petitioners.  See Moline Props., Inc. v. Commissioner, supra.            
          Nevertheless, because petitioner, through G&A, was involved in              
          income-producing activities, we think it improper that all of the           
          deductions claimed on the Schedules C should be considered                  
          entirely attributable to PSI.  Instead, based upon what sense we            
          can make from the record (including the testimony of petitioners’           
          professional income tax return preparer) and taking into account            
          respondent’s agreement that substantiation, including the type              
          contemplated by section 274(d), is not in issue for any year,               








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