Frank J. & Ann M. Feraco - Page 13




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          Rather, it was an entirely separate event.  Moreover, there was             
          no specific time in which he was supposed to lend the money.                
               Bob was listed as a shareholder of Southern Auto on the                
          Schedules K-1 in 1993 and 1994.  These Schedules K-1 were                   
          attached to the Forms 1120S, U.S. Income Tax Return for an S                
          Corporation, which were signed under penalties of perjury by                
          Frank.  Because there was no objection to such Schedules K-1 by             
          Thomas, we find these Schedules K-1 showed that both Frank and              
          Thomas believed Bob was a shareholder and treated him as such.              
          Bob performed different duties than did the salespeople.                    
          Petitioners argued that Frank, Thomas, and Bob received                     
          "commissions", but Frank never sold any cars and the three of               
          them took "commissions" on all of the sales by the salespeople.             
          Such sharing of earnings is typical of owners, not fellow                   
          employees.  Bob's position as Vice President and his appointment            
          to the Board of Directors are more typical of an owner than of an           
          employee.  Cf. Pahl v. Commissioner, supra.                                 
               Petitioners stress that stock was never issued to Bob.                 
          However, as stated above, beneficial ownership, not legal title,            
          is controlling.  Pahl v. Commissioner, supra.  Although Federal             
          tax law controls, we note that under Georgia law, shares of stock           
          need not be represented by certificates under section 14-2-626 of           
          the Official Code of Georgia Annotated.  Ga. Code Ann. sec. 14-2-           
          625(a) (1999).  Here, there were enough shares of stock of                  





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