Zabetti A. Pappas - Page 21

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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.           
               In this case, “Adopting a reasonable meaning of the Moline             
          Properties’ guiding phrase,” id., we hold that Real Services did            

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