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Commissioner, 54 T.C. 1530, 1533 (1970); Schroeder v.
Commissioner, 40 T.C. 30, 33 (1963). Furthermore, it is
axiomatic that “The Commissioner and the reviewing courts are
permitted to fully examine any transaction to determine its
economic and financial reality.” Noble v. Commissioner, 368 F.2d
439, 443 (9th Cir. 1966), affg. T.C. Memo. 1965-84. Those
transactions which lack economic substance may be ignored. See,
e.g., Gregory v. Helvering, 293 U.S. 465, 467 (1935); Muhich v.
Commissioner, 238 F.3d 860, 864 (7th Cir. 2001), affg. T.C. Memo.
1999-192.
Section 61(a) defines gross income as “all income from
whatever source derived”. The regulations demonstrate the term’s
expanse: “Gross income includes income realized in any form,
whether in money, property, or services.” Sec. 1.61-1(a), Income
Tax Regs.; see Han v. Commissioner, T.C. Memo. 2002-148 (citing
Commissioner v. Glenshaw Glass Co., 348 U.S. 426, 431 (1955)).
As the Supreme Court explained, an amount “constitutes taxable
income when its recipient has such control over it that, as a
practical matter, he derives readily realizable economic value
from it.” Rutkin v. United States, 343 U.S. 130, 137 (1952).
However, funds distributed by a corporation to a shareholder
over which the shareholder has dominion and control generally are
taxed under the auspices of section 301(c). Barnard v.
Commissioner, T.C. Memo. 2001-242. Pursuant to section 301(c), a
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