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activities are determined not as decisions of the corporation but
by their owners acting individually.”
There is no evidence, nor has respondent directly argued,
that the separate entity status of petitioner or Crocus should be
disregarded. The stockholders’ agreement is simply an agreement
between stockholders to split petitioner’s net profits in
percentages that vary from the stockholders’ stock ownership
percentages. We reject petitioner’s argument that the
stockholders’ agreement is superseded by the royalty agreement
because there is no evidence that the stockholders have ever
rescinded the stockholders’ agreement or declared it invalid.
Although we agree with respondent that the stockholders’
agreement is still valid and in effect, it does not prove that
petitioner or Crocus acted in such a way that their separate
corporate status should be disregarded. Petitioner and Crocus
were formed for substantial nontax business purposes and engaged
in business activities, including conducting and providing
services for trade shows. Petitioner, not its stockholders,
conducted trade shows in the United States and the former Soviet
Union. Crocus, not Agalarov, performed services in helping
petitioner put on foreign trade shows. Third parties, including
Expocentr and exhibitors, transacted business with petitioner and
Crocus, not their stockholders. Petitioner never declared or
paid dividends to any of its stockholders, and there is no
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