George Georgiou and Judith Georgiou A.K.A. Judy Georgiou, et al. - Page 28

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            1504 of the 1954 Code [1504(a) of the 1986 Code] and stated in                                 
                  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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