- 17 -
(9th Cir. 1976), revg. T.C. Memo. 1972-223; Ragghianti v.
Commissioner, 71 T.C. 346, 349 (1978), affd. without published
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, and in
Cordes v. Commissioner, T.C. Memo. 2002-124, we held Mr. Cordes
received constructive dividends even though he did not hold legal
title to any shares because we found he exercised full control
over CFC in the taxable years there at issue. In those cases,
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 held that “whether or not petitioner [Mr. Cordes] was
a stockholder of record, petitioner had beneficial ownership of
all of the stock”. Cordes v. Commissioner, T.C. Memo. 2002-124;
Cordes v. Commissioner, T.C. Memo. 1994-377. By virtue of his
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