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[taxpayers].” We concluded that the taxpayers “used * * * [the
payor corporation] as an incorporated pocketbook.”
In Culnen v. Commissioner, supra, we found that “for many
years (including the years in question), the * * * [taxpayer] had
used * * * [the payor corporation] as an incorporated pocketbook,
having the corporation make payments on his behalf, which
payments were posted to * * * [the payor corporation’s] books as
loans to * * * [the taxpayer].”
In both Yates and Culnen, we understood the term
“incorporated pocketbook” to describe the taxpayer’s habitual
practice of having his wholly owned corporation pay money to
third parties on his behalf. Whether that practice is habitual
and whether it is probative of whether any ambiguous payment is
being made by the corporation on behalf of its owner (as opposed
to on its own behalf) are questions of fact to be resolved on the
basis of the particular facts of the case. The term
“incorporated pocketbook” describes a set of facts, not a legal
conclusion. It is not a term of art.
The evidence indicates that, over a 5-year period (1996-
2000), Paulan wrote 55 checks (the 55 checks) to or on behalf of
petitioners totaling $689,784 (summarized in a schedule entitled
“Paulan Properties Summary of Partners Draw Checks”).15 Of those
15 The schedule lists 20 additional checks totaling
$169,364, but it is not clear that any of those checks were
(continued...)
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