- 8 -
from the corporate bank account, they were clearly for the
business of the corporation. Petitioners argue that Mr. Brayshaw
is an independent contractor of the corporation, and that the
expenses paid were all taken into account in the amount of
“salary” the corporation paid him and which he reported on the
Schedule C. With the record before us, there is no manner in
which we could trace the various funds from the corporation
and/or through its bank account to determine if Mr. Brayshaw did
in fact report as income the amounts he used to pay the
corporation’s expenses.4 In any case, respondent has not
challenged the amount of Mr. Brayshaw’s income from the
corporation and, regardless of the source of the funds, Mr.
Brayshaw is not entitled to deduct expenses of the corporation on
his individual income tax return. See Deputy v. du Pont, supra;
Hewett v. Commissioner, supra.
Automobile-related expenses
Petitioners owned at least three automobiles during the year
in issue: A 1969 Mercedes, a 1972 Mercedes, and a 1995 Jeep
Grand Cherokee. Petitioners argue that the Jeep--which was
acquired in October 1994--was used solely for business purposes,
3(...continued)
of this argument is unclear, but petitioners’ assertion of it
supports our finding that these were corporate expenses.
4We note that Mr. Brayshaw was a corporate lawyer for
several years and thus presumably should be familiar with the
concept of the separate legal entity of a corporation.
Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Next
Last modified: May 25, 2011