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disallowed Schedule C expenses which represent pre-incorporation
expenditures.
A. Disregarding the Corporate Entity
Generally, an individual is not entitled to deductions for
business expenses of a corporation because the trade or business
of a corporation is considered separate and distinct from the
trade or business of the individual. See Moline Properties, Inc.
v. Commissioner, 319 U.S. 436, 438-439 (1943); Deputy v. duPont,
308 U.S. 488, 495 (1940); New Colonial Ice Co. v. Helvering, 292
U.S. 435, 442 (1934). Petitioner argues that this Court should
disregard Export’s corporate form.
A taxpayer is generally free to organize his affairs as he
chooses, but a taxpayer must accept the tax consequences of those
choices. See Commissioner v. National Alfalfa Dehydrating &
Milling Co., 417 U.S. 134 (1974). Once a taxpayer has made his
bed, he must lie in it. See Hagist Ranch, Inc. v. Commissioner,
T.C. Memo. 1960-206, affd. 295 F.2d 351 (7th Cir. 1961). “Where
the taxpayer, for business purposes of his own, adopts the
corporate form for carrying on a business, the choice of
corporate advantage to do business requires acceptance of the tax
disadvantages.” Skarda v. Commissioner, 250 F.2d 429, 434 (10th
Cir. 1957), affg. 27 T.C. 137 (1956).
We will not disregard the corporate entity so long as the
corporation has a valid business purpose or the corporation
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