- 26 -
entities. At the time Taxman was incorporated, petitioner was
being sued as an individual and as sole proprietor of his tax
preparation business. Petitioner’s goal of obtaining limited
liability for his tax preparation business by operating his
business through Taxman is a sufficient business purpose for
Taxman to be recognized as a separate entity. See Moline Props.,
Inc. v. Commissioner, supra at 438-439. In addition, Taxman had
employees, filed tax returns, maintained books, records, and a
bank account, and held assets and liabilities. This level of
ongoing business activity is also sufficient for the Court to
conclude that Taxman was not a sham corporation. See id.
WFIC was organized by Mr. Smith in 1949, and from 1988 until
1994, it operated a commercial real estate business. Until 1991,
Mr. Smith remained actively involved in WFIC’s day-to-day
business operations and had an office in Taxman’s business space.
WFIC maintained books, records, and bank accounts and filed
corporate tax returns. Petitioner applied for his real estate
broker’s license as an employee of WFIC and ran most of his real
estate transactions through WFIC’s trust account. WFIC also had
other real estate agents working for it. These business
activities are sufficient to convince us that WFIC was not a sham
and should be recognized as a corporate entity separate from
petitioner. See id.
Page: Previous 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 NextLast modified: May 25, 2011