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Therefore, respondent bears the burden of proving that: (1)
Petitioner had unreported income in each of 1990, 1991, 1992, and
1993 of $3,000 by means of cash diverted from Taxman; (2)
petitioner had unreported crop hail insurance commission income
in 1990 and 1991 of $12,882 and $3,142, respectively; (3)
petitioner had unreported real estate commission income of
$28,098, $9,276, and $69,540 in 1990, 1991, and 1993,
respectively; and (4) petitioner is liable for self-employment
tax on his unreported commission income. Petitioner bears the
burden of proof on the remaining adjustments.
III. Validity of Taxman and WFIC
Respondent first argues that petitioner used both Taxman and
WFIC as his alter egos and they should be disregarded for tax
purposes. Essentially, respondent asks us to find that Taxman
and WFIC lack economic substance and are shams. Respondent
points to petitioner’s control over each corporation, his use of
corporate funds to pay personal expenses, and his inconsistent
representations of his positions in each corporation. Petitioner
argues that he treated Taxman and WFIC as entities that were
legally separate from himself.
Respondent does not argue that Taxman and WFIC were not
properly organized under North Dakota law. However, even though
a corporation is organized under the laws of a State, we may
disregard it for Federal tax purposes if it is no more than a
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