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organized to carry on a business activity or if, in fact, it has
carried on such activity. Moline Props., Inc. v. Commissioner,
319 U.S. 436 (1943). However, “in matters relating to the
revenue, the corporate form may be disregarded where it is a sham
or unreal. In such situations, the form is a bald and
mischievous fiction.” Id. at 439. In the latter situation, the
Government may not be required to acquiesce in the taxpayer’s
election of that form for doing business which is most
advantageous to him. The Government may look at actualities and
upon determination that the form employed for doing business or
carrying out the challenged tax event is unreal or a sham may
sustain or disregard the effect of the fiction as best serves the
purposes of the tax statute. See Higgins v. Smith, 308 U.S. 473,
477 (1940).
Here, if Real Services operated merely as a sham or the
alter ego of petitioner, its incorporation would have no impact
on her Federal income tax liabilities. See G.M. Leasing Corp. v.
United States, 429 U.S. 338, 350-351 (1977). The question before
us, then, is whether Real Services “conducted the kind and amount
of business activities to be a taxable entity.” Kimbrell v.
Commissioner, 371 F.2d 897, 902 (5th Cir. 1967), affg. T.C. Memo.
1965-115.
In this case, “Adopting a reasonable meaning of the Moline
Properties’ guiding phrase,” id., we hold that Real Services did
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