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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 was
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