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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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