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His actions were that of an owner and sole shareholder. He
viewed the Cordes corporations as his own and used them to make
generous loans and gifts to family and friends, and to satisfy
personal obligations and desires. He made loans to third parties
of CFC funds and then unilaterally forgave those loans. Mr.
Cordes controlled the timing, amount, and use of the
distributions and transactions.
The legal titleholders viewed CFC as Mr. Cordes did. They
paid no attention to their purported stockholdings and never
attempted to exercise any of the rights that “ownership” may have
theoretically provided. They did not attempt to attend
shareholder meetings, transfer or vote their shares, or otherwise
involve themselves in CFC, unless Mr. Cordes instructed them to
do so. His control was unmitigated.
Taken together, the facts and circumstances reveal that Mr.
Cordes was CFC’s sole beneficial owner during the taxable years
at issue; Mrs. Cordes’s status as a shareholder was in name only.
Because beneficial ownership is the controlling factor in
deciding who is required to include dividends in gross income, we
hold that Mrs. Cordes did not receive constructive dividends from
CFC for the 1989, 1990, and 1991 taxable years, the years in
which she filed separately. With respect to those taxable years,
we conclude only that Mrs. Cordes was not a beneficial owner or
shareholder of CFC for Federal income tax purposes. We decline
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