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grains to different companies for other purposes. Petitioner did
not prove a direct relationship between the corn or soybeans
which are the basis of its business and the hog futures in which
it deals. Moreover, what is also critical is that petitioner did
not establish that there was a close relationship, or any
relationship, between the price of corn or soybeans and the price
of hog futures. The transactions in hog futures did not reduce
the risk of price changes or currency fluctuations with respect
to petitioner's ordinary property.
Petitioner also contends that its major stockholder, Reis,
maintains the hedging account to protect his hog and grain prices
and that everything is held in one account to save expenses and
time. Respondent’s position is that the business of the other
corporations in which Reis is a shareholder may not be attributed
to Reis, and then reattributed from him to petitioner.
It is well settled that a corporation is an entity distinct
from its shareholders. Dalton v. Bowers, 287 U.S. 404, 410
(1932). A corporation's business is not attributable to its
shareholders, absent exceptional circumstances. Burnet v. Clark,
287 U.S. 410, 415 (1932). While the regulations under section
1221 provide that the risk of one member of a "consolidated
group" may be treated as the risk of the other members of the
group, there is no evidence that petitioner, Reis Ag, and Grow
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