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crucial. To speak of an agreement between Mr. Souris and his
P.C. authorized by its Board is to engage in discourse in a
never-never land. In the real world there was only Mr. Souris
dealing with himself.2 Yet it has been well recognized that we
must accept such arrangements as real,3 and indeed the IRS has
treated the corporation as an independent entity that was engaged
in the transactions involved as though conducted at arm's length.
Moreover, although not specifically so articulated in the record,
it seems highly likely that the incorporation of the P.C. here
was intended to reduce Mr. Souris' taxes through the pension
2 The predicament with which the Lord Chancellor was faced
in Gilbert and Sullivan's Iolanthe, although in an entirely
different context, suggests a strikingly similar situation. The
Lord Chancellor explained his predicament as follows:
The feelings of a Lord Chancellor who is in love with a
Ward of Court are not to be envied. What is his
position? Can he give his own consent to his own
marriage with his own Ward? Can he marry his own Ward
without his own consent, can he commit himself for contempt of
his own court? And if he commit himself for contempt of his own
court, can he appear by counsel before himself, to move for
arrest of his own judgment? Ah, my Lords, it is indeed painful
to have to sit upon a woolsack which is stuffed with such thorns
as these! [The Complete Plays of Gilbert and Sullivan, p. 248.]
3 Moline Properties, Inc. v. Commissioner, 319 U.S. 436
(1943); cf. Burnet v. Commonwealth Improvement Co., 287 U.S. 415
(1932). In National Carbide Corp. v. Commissioner, 336 U.S. 422,
433 (1949), the Supreme Court stated:
Undoubtedly the great majority of corporations owned by
sole stockholders are "dummies" in the sense that their
policies and day-to-day activities are determined not
as decisions of the corporation but by their owners
acting individually. * * *
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