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vehicle for tax avoidance and void of a legitimate business
purpose. Gregory v. Helvering, 293 U.S. 465 (1935); Aldon Homes,
Inc. v. Commissioner, 33 T.C. 582, 596 (1959). While a taxpayer
is free to adopt the corporate form of doing business, the
corporation must have been organized for a substantial business
purpose or actually engage in substantive business activity in
order to be a viable business entity. Moline Props., Inc. v.
Commissioner, 319 U.S. 436, 439 (1943) (stating that such
business purposes include gaining an advantage under the laws of
the State of incorporation, avoiding or complying with the
demands of creditors, and serving the creator’s personal or
undisclosed convenience); Aldon Homes, Inc. v. Commissioner,
supra at 597.
On the other hand, a corporation remains a separate taxable
entity as long as the purpose for which it was formed “is the
equivalent of business activity or is followed by the carrying on
of business by the corporation”. Moline Props., Inc. v.
Commissioner, supra at 438-439. The degree of corporate business
purpose required for recognition of a separate corporate
existence is “extremely low.” Strong v. Commissioner, 66 T.C.
12, 24 (1976), affd. 553 F.2d 94 (2d Cir. 1977); Lukins v.
Commissioner, T.C. Memo. 1992-569.
The business purposes and activities of Taxman and WFIC were
sufficient to require recognition of them as separate legal
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