Dale H. Sundby and Edith Littlefield Sundby - Page 16

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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           

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