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Since the parties are in apparent consensus, and the evidence
reflects, that 50 percent of CIBV stock was titled in Nestor
after the buyout, we turn to whether there exists grounds for
respondent’s arguments concerning petitioners’ deemed ownership.
Regulations indicate that voting power is the primary
consideration in deciding ownership for purposes of CFC status.
Hence, the linkage between Nestor and petitioners established by
the above-quoted proxies lends support to respondent’s claims
regarding CIBV’s CFC status on and after December 30, 1989.
With respect to section 951 attribution, the regulatory test
focuses on ascertaining the extent of a party’s interest in the
income of the CFC. The regulations further expressly provide
that “any arrangement which artificially decreases a United
States person’s proportionate interest will not be recognized.”
Sec. 1.958-1(c)(2), Income Tax Regs. Based on this standard, we
must conclude that the proxies are likewise pertinent to, and
potentially supportive of respondent’s position on, the question
of a proper section 951 allocation. The regulations indicate
that a person could in some circumstances be deemed to hold an
interest in income that might, as a formal matter, have resided
in someone else.
Here, if Mr. Vajna and the Mong Family Trust possessed 100
percent of the voting power in CIBV (directly or by proxy), and
if it were decided that the Mong Family Trust must be equated
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