Clifford L. Brody and Barbara J. Declerk - Page 11

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          * * * [corporations] and [the taxpayer] cannot convert * * * [the           
          corporate] expenses into his own by failing to claim repayment,             
          even though paid by him.”  See also Orvis v. Commissioner, 788              
          F.2d 1406 (9th Cir. 1986), affg. T.C. Memo. 1984-533; Coplon v.             
          Commissioner, 277 F.2d 534 (6th Cir. 1960), affg. T.C. Memo.                
          1959-34.                                                                    
               As a general rule, a taxpayer’s payment of another person’s            
          obligation is not an ordinary and necessary business expense.               
          Deputy v. du Pont, 308 U.S. 488 (1940).  Under this rule, a                 
          shareholder, even a majority or sole shareholder, is not entitled           
          to deduct his or her payments of the corporation’s expenses.                
          Rink v. Commissioner, 51 T.C. 746, 751 (1969); Willits v.                   
          Commissioner, T.C. Memo. 1999-230.  For Federal income tax                  
          purposes, a corporation is recognized as a separate taxable                 
          entity from its shareholders.  See Moline Props., Inc. v.                   
          Commissioner, 319 U.S. 436, 438-439 (1943).  Because a                      
          corporation’s business is distinct from that of its shareholders,           
          officers, and employees, such persons may not deduct expenses               
          which promote the business of the corporation.  Leamy v.                    
          Commissioner, 85 T.C. 798 (1985); Kahn v. Commissioner, 26 T.C.             
          273 (1956); Das v. Commissioner, T.C. Memo. 1998-353.                       
               In the present case, the loan from Franklin National Bank              
          was used not to pay petitioners’ expenses, but to pay those of              







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