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not conduct sufficient business activities to be recognized for
Federal income tax purposes.
Petitioner’s activities with respect to Real Services reveal
many characteristics of an alter ego, such as:
“the intermingling of corporate and personal funds,
undercapitalization of the corporation, failure to
observe corporate formalities such as the maintenance
of separate books and records, failure to pay
dividends, insolvency at the time of a transaction,
siphoning off of funds by the dominant shareholder, and
the inactivity of other officers and directors.”
[LiButti v. United States, 107 F.3d 110, 119 (2d Cir.
1997) (quoting Bridgestone/Firestone, Inc. v. Recovery
Credit Servs., Inc., 98 F.3d 13, 18 (2d Cir. 1996)).]
Petitioner observed no meaningful distinction between her
personal funds and those of her corporation. Although petitioner
opened bank accounts in the name of Real Services, she siphoned
funds from that account for personal expenses and gifts. On the
other hand, petitioner wrote checks in her own name for
transactions that she now alleges were those of Real Services.
The record also reveals a number of checks made out to Real
Services from petitioner’s escort service clients, but the
evidence suggests that, in naming the payee, the clientele were
only following petitioner’s wishes.
There is no indication that Real Services was ever properly
capitalized; to the contrary, it often appeared to be insolvent.
Individuals such as John K. and Tammy M., who had made loans to
petitioner operating as Real Services, reported that checks they
received in repayment often were dishonored.
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