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and exercised full and complete control over all of
Ghalardi's assets. There is no evidence in this case that
Ghalardi had any role or economic purpose other than to
shift income from Mr. Webber and tax avoidance. We find
that Mr. Webber stood in the same position with respect
to the assets allegedly held by Ghalardi after its
formation as before. See Zmuda v. Commissioner, 79 T.C.
714, 721 (1982), affd. 731 F.2d 1417 (9th Cir. 1984);
Professional Servs. v. Commissioner, 79 T.C. 888, 925
(1982). Mr. Webber was free to deal with Ghalardi's assets
without restraint and, as a matter of economic reality,
there was no separation of legal title from beneficial
enjoyment and, hence, Ghalardi was a nullity. See
Markosian v. Commissioner, 73 T.C. 1235, 1244-1245 (1980);
Dahlstrom v. Commissioner, T.C. Memo. 1991-265, affd.
without published opinion 999 F.2d 1579 (5th Cir. 1993).
Accordingly, we agree with respondent that Ghalardi is a
sham for Federal income tax purposes. Thus, we sustain
the adjustment to Mr. Webber's 1993 return in which
respondent increased Mr. Webber's taxable income by the
amount of Ghalardi's gross income for the year. The
notice of deficiency issued to Ghalardi which appears
to have been in the nature of a protective notice of
deficiency, is hereby disapproved. See Professional
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