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Medical Society. Even if petitioner was to rely on his brother
for patient referrals, these customary business steps were not
taken to attract clients in addition to the referrals.
Most notably, petitioner fails to explain how he could have
conducted his medical practice at the Sherman Oaks Property while
failing to generate any revenue. In 1994, petitioner reported
Schedule C gross receipts of $1,056,961. None of these gross
receipts were shown to be derived from activity at the Sherman
Oaks Property. Further, the Skin Service Club reported zero
gross receipts on its S corporation tax return. If petitioner
had conducted his medical practice at the Sherman Oaks Property
at any time in 1994, such activity would have generated revenue
reportable on either petitioner’s Schedule C or the Skin Service
Club’s corporate return.
Respondent concedes that the Skin Service Club conducted
some business activity at the Sherman Oaks Property during 1994.
However, the business activity was minimal at best, with zero
revenue and minimal expenses. There is no evidence indicating
that petitioner was involved with the Skin Service Club’s
business activity during 1994.
In 1997, none of petitioner’s $1,253,902 Schedule C gross
receipts were derived from activity at the Sherman Oaks Property.
Further, the Skin Service Club was dissolved before 1997, and the
Sherman Oaks Property was completely vacant for the entire year.
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Last modified: May 25, 2011