Theory applies to the situation in which owners of a corporation have so mingled their own affairs with those of the corporation that the corporation does not exist as a distinct entity.

Theory  that applies to the situation in which owners of a corporation have so mingled their own affairs with those of the corporation that the corporation does not exist as a distinct entity is called: alter-ego theory
one of the benefit that could be taken through this by the owner is the opportunity to write off some tax paymenr