609 n.5. We also note that in Hallowell v. Commissioner, supra
at 607-609, we found it highly significant that the amount of
distributions to the taxpayers from their controlled corporation
during a year "roughly corresponded" to the gains realized on the
sale during that year of stock transferred to the corporation.
The instant case involves the distribution, within a year of the
transfer and sale of the horses, of an amount not merely "roughly
corresponding" to the gain realized on the sale of the horses,
but exactly equal to the full amount of the sales proceeds and
the earnings thereon held in the name of APECO Equine.
Furthermore, the audited financial statement of APECO for the
year ending June 30, 1990, notes that the distribution was made
for the purpose of returning Mr. Kluener's earlier
contribution.10 Consequently, we feel that the grounds for
attaching significance to the subsequent distribution and for
holding APECO a mere conduit are at least as compelling in the
instant case as in Hallowell.
Moreover, in distributing the funds held in APECO Equine's
name, Mr. Kluener continued his policy of keeping their existence
9(...continued)
distribution served a corporate purpose of APECO.
10 APECO's audited financial statement for its year ending June
30, 1990, states:
In June 1990, the Company declared a distribution of
$2,176,000 which was paid in July 1990. This
distribution was recorded as a reduction of additional
paid in capital. The distribution was intended to
return the 1989 capital contribution plus earnings on
the invested funds to the shareholder. The shareholder
then loaned $176,000 to the Company. * * *
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