Regina Felton, PC - Page 11

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          within his possession and which, if true, would be favorable to             
          him, gives rise to the presumption that if produced it would be             
          unfavorable.”  Wichita Terminal Elevator Co. v. Commissioner, 6             
          T.C. at 1165.  Under Wichita Terminal, the assumption must be               
          that the incorporation documents would contradict Ms. Felton’s              
          testimony.                                                                  
               Balanced against Ms. Felton’s unsupported assertions, see              
          Tokarski v. Commissioner, 87 T.C. at 77, are the facts in this              
          case establishing that Ms. Felton is the corporate petitioner’s             
          sole shareholder.  She is the sole attorney performing all of the           
          petitioner law firm’s legal services.  Ms. Felton is also                   
          presumed to be the sole officer and/or director of the                      
          corporation.8  It is the opinion of the Court that Ms. Felton is            
          petitioner’s employee for the purpose of the instant analysis.              
               Therefore, because all of petitioner’s stock was held                  
          directly by its employee, Ms. Felton, petitioner also satisfied             


               8  “When all of the issued and outstanding stock of the                
          corporation is owned by one person, such person may hold all or             
          any combination of offices.”  N.Y. Bus. Corp. Law sec. 715                  
          (McKinney 2006).  Aside from Ms. Felton’s being listed with the             
          New York Secretary of State as petitioner’s chairman or chief               
          executive officer, New York State law requires that all officers            
          and directors of a professional service corporation be authorized           
          to engage in the practice of the profession “which such                     
          corporation is authorized to practice” and is either a                      
          shareholder or “engaged in the practice of his profession in such           
          corporation.”  N.Y. Bus. Corp. Law sec. 1508 (McKinney 2006).               
          Ms. Felton is petitioner’s sole shareholder, and she testified              
          that she is the only attorney who performed legal services for              
          petitioner.  None of the clerical or secretarial staff employed             
          by petitioner is authorized under New York State law to be an               
          officer or director of the corporation.                                     




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Last modified: May 25, 2011