Stanley Forman Reed

“ Petitioner advances what we think is basically the same argument of identity in a different form. It urges that it is a mere agent for its sole stockholder and 'therefore the same tax consequences follow as in the case of any corporate agent or fiduciary.' There was no actual contract of agency, nor the usual incidents of an agency relationship. Surely the mere fact of the existence of a corporation with one or several stockholders, regardless of the corporation's business activities, does not make the corporation the agent of its stockholders. ”

“ The Board of Tax Appeals held for petitioner on the ground that because of its limited purpose, the corporation 'was a mere figmentary agent which should be disregarded in the assessment of taxes.' Moline Properties, Inc. v. Commissioner, 45 B.T.A. 647. The Circuit Court of Appeals reversed on the ground that the corporate entity, chosen by Thompson for reasons sufficient to him, must now be recognized in the taxation of the income of the corporation. Commissioner v. Moline Properties, Inc., 5 Cir., 131 F.2d 388.
The doctrine of corporate entity fills a useful purpose in business life. ”

“ The petitioner corporation was created by Thompson for his advantage and had a special function from its inception. At that time it was clearly not Thompson's alter ego and his exercise of control over it was negligible. It was then as much a separate entity as if its stock had been transferred outright to third persons. The argument is made by petitioner that the force of the rule requiring its separate treatment is avoided by the fact that Thompson was coerced into creating petitioner and was completely subservient to the creditors. ”