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corporation. The agreements did not obligate him to do it, and
moreover it was probably a matter of indifference to petitioner
Dawes, and to Ameritech, whether he did it, his stock in
Ameritech having been relinquished in the previous exchange.
Absent sham or agency principles, the corporations involved
are considered separate taxable entities. Moline Properties,
Inc. v. Commissioner, 319 U.S. 436 (1943). There is no
indication that this was a sham or that either corporation was
petitioner Dawes' agent. Therefore, once the reorganization,
which was incident to the divorce, was completed, any further
transactions between petitioner Praegitzer and 303 Products, his
solely owned corporation, would be taxed according to general
principles of taxation.
This situation is distinguishable from Arnes v. United
States, where the taxpayer received assets of a corporation in
redemption of her stock. In that case the receipt of such assets
was part and parcel of resolving community property claims to the
stock in the context of a divorce. Here, by contrast, the stock
in Ameritech was relinquished and a severance of the community
interest was accomplished through transactions that may be
separated from petitioner Praegitzer's receipt of the dividend.
Petitioner Praegitzer did not get the dividend as an integral or
necessary step in the marital property settlement; rather it was
a bailout of corporate assets, which was carried out at his own
instance, and on which he may properly be taxed. We conclude,
therefore, that the distribution of cash and cancellation of
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