- 79 -
In accordance with our earlier analysis, petitioner
exercised dominion and control over the Kodak stock before
returning the proceeds from its sale to his corporations (by
virtue of the transfer of those proceeds to the ANB No. 1 account
on June 24, 1988). Specifically, after being moved from
petitioner’s FCIS account to the P-B No. 1 account, to the Sam
Han account and back to P-B No. 1, the Kodak stock was sold on
June 24, 1988, for a net of $445,598, which was transferred that
same day to ANB No. 1. Since petitioner purchased the Kodak
stock with diverted corporate funds of $448,878 and returned only
$445,598 to his corporations, he is chargeable with $3,280 in
income as a result ($448,878 - $445,598 = $3,280).46
(...continued)
stock exceeds respondent’s determination because petitioner sold
the other stocks purchased with corporate funds at a profit and
returned the augmented proceeds to a corporate account. Because
of this augmentation of the returned proceeds, respondent’s
computation of the “net” proceeds retained by petitioner–-
measured by the amount taken less the amount returned–-is less
than the actual corporate funds retained by petitioner and
invested in the Kodak and Pan Am stock. See discussion supra
pp. 45-46.
46 As noted earlier, petitioner reported the loss from the
sale of Kodak stock on his 1988 return. Since the diminution in
the stock’s value occurred while it was under petitioner’s
dominion and control, and he is chargeable with the income
resulting from his return to his corporations of Kodak stock
proceeds that were less than the corporate funds used to acquire
the stock, we conclude that petitioner is entitled to the loss as
claimed.
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