- 31 -
opinion 652 F.2d 65 (9th Cir. 1981); Cepeda v. Commissioner, T.C.
Memo. 1994-62). “‘Beneficial ownership is marked by command over
property or enjoyment of its economic benefits.’” Cordes v.
Commissioner, T.C. Memo. 1994-377 (quoting Cepeda v.
Commissioner, supra). A taxpayer’s total control over a
corporation and use of corporate funds for personal reasons can
result in constructive dividends, even though the taxpayer did
not hold legal title to the corporation’s stock at the time of
the advances. Yelencsics v. Commissioner, 74 T.C. 1513, 1532-
1533 (1980); Cordes v. Commissioner, T.C. Memo. 1994-377.
In Cordes v. Commissioner, T.C. Memo. 1994-377, we held Mr.
Cordes received constructive dividends even if he did not hold
legal title to any shares, because we found he exercised full
control over CFC in the taxable year at issue, 1988.32 In 1988,
the taxable year immediately preceding those before us here, Mr.
Cordes caused CFC to make distributions to him, to friends and
family, and to his personal creditors. He controlled the timing,
amount, and uses of those funds. Because Mr. Cordes had total
control over CFC and used the corporate funds for personal
reasons, we concluded that “whether or not petitioner [Mr.
Cordes] was a stockholder of record, petitioner had beneficial
32We note in passing that in Cordes v. Commissioner, T.C.
Memo. 1994-377, we stated, based on the evidence therein: “[Mr.
Cordes’s] complete control over Cordes Finance Corp. continued
until at least 1992”.
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