In re Frazier

ORDER

The issue in this bankruptcy appeal is whether the business known as Markley Corporation should be treated as a taxable entity separate from the debtor, John Carl Frazier. If so, Frazier could not claim losses from that business on his individual income tax returns for 1973 and 1974. It is undisputed that Frazier never formally transferred any assets to Markley Corporation and that no stock was ever issued. The bankruptcy court held that Markley Corporation was not a separate legal entity, but was merely one of many “dba’s” used by Frazier. The United States’ claim for income tax deficiencies caused by Frazier’s deduction of “Markley Corporation’s” business losses was therefore disallowed. The United States appeals this disallowance, arguing that the Bankruptcy Court misapplied the law.

STANDARD OF REVIEW

Mixed questions of law and fact, where the reviewing court is “require[d] to consider legal concepts in the mix of fact and law and to exercise judgment about the values that animate legal principles are classified as one of law and reviewed de novo.” United States v. McConney, 728 F.2d 1195, 1202 (9th Cir.) (en banc), cert. denied, 469 U.S. 824 , 105 S.Ct. 101 , 83…