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the corporate account by yearend constituted taxable income to
petitioner; that is, respondent determined that the $1,294,058
transferred from the corporate account to purchase stock in the
personal brokerage account, less $757,20229 in stock sales
proceeds returned to the corporate account, or $536,856, was
additional income to petitioner in 1988. Respondent proposed no
adjustment to petitioner’s taxable income as a result of the
profitable (or losing) sales of the stocks for which the proceeds
were returned to Albank No. 1.30 Thus, respondent’s determination
of additional income as a result of the transfers between the
corporate Albank No. 1 account and petitioner’s personal FCIS
account equaled $536,856, even though stocks purchased with
corporate funds totaling $565,478 were retained in petitioner’s
FCIS account as the net result of the transfers.
In addition, during the first 3 months of 1988, petitioner
transferred a total of $450,000 in cash from corporate accounts
into the Sam Han account. On July 18, 1988, a check for $80,000
29 For this purpose, respondent treated the stock proceeds
returned to the corporate account ($752,702), as well as a $4,500
dividend paid on the Kodak stock on Apr. 4, 1988, and transferred
from petitioner’s FCIS account to the corporate Albank No. 1
account on the same day, as amounts returned.
30 Petitioner in any event reported the gains and losses
from the sale of all but one of these stocks on his 1988 return
(although he now contends that he held the stocks as an agent of
his corporations).
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