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became worthless in 1997. The Court’s findings in Sundby are
consistent with our finding in this case that the business
activity conducted by petitioner in 1994 was conducted in his
role as CEO of Navis rather than in a sole proprietorship, and
our holding is not affected by petitioners’ failure to introduce
evidence of an S corporation election in the prior case.
In summary, the Court has received into evidence hundreds of
pages of receipts and invoices offered by petitioner, who argues
that each and every one represents a deductible expense.
However, we conclude that many of the expenses are nondeductible
personal expenses, see sec. 262(a), and that, to the extent that
the receipts are for trade or business expenses, the expenses
relate to the trade or business of Navis rather than petitioner,
see Moline Props., Inc. v. Commissioner, supra. Petitioners are
not now free to disregard the corporate entity for tax purposes
after gaining a business advantage from its use, and the fact
that petitioners personally paid certain expenses does not alter
their characterization as corporate expenses. See id.; Deputy v.
du Pont, supra; Weigman v. Commissioner, 47 T.C. 596 (1967); Rand
v. Commissioner, 35 T.C. 956 (1961). Petitioners have provided
no other grounds for deducting any of the remaining expenses, if
any, evidenced by the receipts.3
3One invoice received in evidence as alleged substantiation
for petitioner’s Schedule C expenses, labeled by petitioners as
“office/conference room upholstery fabric for chairs”, listed the
(continued...)
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