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separate legal entity from Georgiou. "The fact is that * * *
[the taxpayer] did have a separate legal existence with
privileges and obligations entirely separate from those of its
stockholders. The fact that it had only one stockholder seems of
no legal significance." Burnet v. Commonwealth Improvement Co.,
287 U.S. 415, 419 (1932).
The analysis in Moline Properties can also be applied to
distinguish Georgiou and JAI as separate legal entities.
Georgiou evaluated the purchase of Petite in his individual
capacity. He decided to incorporate JAI based on several
business reasons, including Georgiou's desire to withhold
Kolonaki's financial information from lessors of Petite stores
and because Kolonaki had just divested itself of its retail
division creating GRS. Georgiou's business reasons for forming
JAI and its subsequent business activity establish JAI as a
separate legal entity from Georgiou. See Moline Properties v.
Commissioner, supra at 438.
The consequence of the separate legal status of Kolonaki,
Georgiou, and JAI is that their overt acts must be analyzed
independently. Kolonaki asserts that it was the beneficial owner
of JAI stock even though it was not the record owner. We agree
that record ownership is not necessary to satisfy the "directly
owned" requirement in section 1504(a). The cases where courts
have permitted a division of legal and beneficial ownership,
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