- 16 - C. Whether Petitioner Had Unreported Income in the Amounts Determined by Respondent 1. Bank and U.S. Treasury Note Interest, Capital Gains, and Check Cashing Income Petitioner does not dispute respondent’s determination of the amounts of the bank interest, Treasury note interest, capital gains, and check cashing income. Instead, he disputes to whom it is taxable. Petitioner contends that the unreported interest, capital gains, and check cashing income are taxable to the 13 corporations. Petitioner contends that interest and capital gains earned with respect to the U.S. Treasury notes are taxable to 2 of those 13 corporations; namely, Poodle Trans. Corp. and Big John Cab Corp. We disagree. A corporation is recognized for Federal income tax purposes if it was formed for a legitimate business purpose, or, if after formation, it conducted legitimate business. Moline Props., Inc. v. Commissioner, 319 U.S. 436, 438-439 (1943); United States v. Wapnick, 60 F.3d 948, 955 n.3 (2d Cir. 1995); Natl. Investors Corp. v. Hoey, 144 F.2d 466, 468 (2d Cir. 1944). However, a corporation is disregarded for Federal income tax purposes if its owners “move their own funds in and out of a corporate account without any regard for which funds belong to the corporation and which belong personally to the corporation’s owners”. United States v. Wapnick, supra (holding that this statement of law wasPage: Previous 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Next
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