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2. Petitioner’s Contentions
When the record owner of S corporation stock holds that
stock for the benefit of another, such as a nominee, agent, or
passthrough entity, income, losses, deductions, and credits of
the corporation are passed through not to the record owner but to
the beneficial owner of the stock. Sec. 1.1361-1(e), Income Tax
Regs. A taxpayer is the beneficial owner of property if the
taxpayer controls the property or has the economic benefit of
ownership of the property. Anderson v. Commissioner, 164 F.2d
870 (7th Cir. 1947), affg. 5 T.C. 443 (1945).
Petitioner contends, in effect, that he was not the
beneficial owner of his Green Hills stock in 2000, and no Green
Hills income passes through to him, because beginning before 2000
O’Dowd improperly excluded him from the benefits of ownership of
that stock. We disagree.
First, petitioner has cited no authority for the proposition
that a record owner of S corporation stock is not subject to pass
through of S corporation income because the record owner has a
diminished role in the corporation as a result of having a poor
relationship with another shareholder. Courts have frequently
considered whether an individual is a beneficial owner of the
stock of an S corporation in deciding whether that person will be
treated as a shareholder of that corporation for tax purposes.
See, e.g., Pahl v. Commissioner, 150 F.3d 1124 (9th Cir. 1998),
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