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the funds in the Bahamian bank account. Respondent contends that
the separate corporate status of WHIP, whose sole business
activity was the bank account, should be ignored. We agree.
Although generally a corporation can only act through its
shareholders or officers and the distinction between the
corporation and its sole shareholder must be respected, this
particular situation is different. Petitioner, WHIP's sole
shareholder, testified that WHIP had no operations. Instead,
WHIP was merely a paper corporation whose only purpose was to
hold funds in a tax haven jurisdiction so that the funds would
escape scrutiny for tax and other purposes. Since WHIP was a
mere skeleton, its existence is disregarded. See Noonan v.
Commissioner, 52 T.C. 907, 909-910 (1969), affd. per curiam 451
F.2d 992 (9th Cir. 1971); Aldon Homes, Inc. v. Commissioner, 33
T.C. 582, 597 (1959). Therefore, we hold that the interest
earned on the WHIP account is includable in petitioner's gross
income for the years in question.
IV. Issue 7--Amount and Character of Gain on Sale of Diesel
Power Stock
On his 1977 Federal income tax return petitioner reported a
long-term capital gain of $4,805,864 from the sale of Diesel
Power stock that he had held since 1958. Respondent determined,
pursuant to section 1248, that petitioner was required to treat
gain from the sale of his Diesel Power stock as ordinary dividend
income rather than long-term capital gain. Respondent also
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