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amount petitioner received from Trans State, as measured by
the amount of H&B funds used to purchase cashier's checks
payable to Jordan Distributors, constitutes income to
petitioners.
Wholesale Fuels, Inc.
On July 21, 1988, petitioner signed check No. 1196
drawn on H&B's First Interstate account and made payable
to Wholesale Fuels in the amount of $6,000. This check
was later deposited into the Wholesale Fuels account at
Founders Bank. Respondent determined that because
petitioner was the sole shareholder of Wholesale Fuels at
the time the check was deposited into its bank account,
the proceeds of this check constitute income to
petitioners.
We agree with respondent's premise that a taxpayer
realizes taxable income by diverting the funds of another
to a corporation wholly owned by the taxpayer. See, e.g.,
Davis v. Commissioner, T.C. Memo. 1991-333. However,
petitioner did not have sole dominion and control over the
funds in the Wholesale Fuels account at Founders Bank. As
found above, Mr. Petty periodically used the money in this
account to satisfy expenses incurred on behalf of H&B.
Thus, we find that the money deposited into the Wholesale
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