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1504 of the 1954 Code [1504(a) of the 1986 Code] and stated in
part:
Since neither * * * [the taxpayer] nor Branch was
connected through stock ownership with a common parent,
the basic requirement of section 1504 has not been met.
* * * [The taxpayer] and Branch were not members of an
affiliated group under section 1504 and therefore were
not entitled to file a consolidated return under
section 1501. * * * [Id. at 1122.]
For the same reason, we reject Kolonaki's argument here.
In sum, Kolonaki is a separate legal entity from Georgiou
and JAI. Kolonaki never held record title to JAI stock, and
Georgiou was not Kolonaki's agent. Kolonaki did not present any
credible documentation that would substantiate Kolonaki's
beneficial ownership of JAI stock as of the controlling date. We
conclude, therefore, that Kolonaki did not have beneficial
ownership of JAI stock as required by the "directly owned"
provision in section 1504(a). We sustain respondent's
determination that Kolonaki is not entitled to file a
consolidated return with JAI; therefore, Kolonaki cannot deduct a
loss from JAI on its 1990 tax return.
II. Georgiou
Georgiou asserts that the advances from Kolonaki's Account
121--Loan to Shareholder were nontaxable loans that he intended
to repay. Respondent contends that the advances were taxable
distributions, i.e., dividends, that were includable in
Georgiou's taxable income. Respondent argues that, at the time
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