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certificates would have helped petitioners’ case, retaining
possession of stock merely as security to ensure payment for the
stock does not indicate retained beneficial ownership in this
case. Hook v. Commissioner, 58 T.C. at 275; Pacific Coast Music
Jobbers, Inc. v. Commissioner, supra at 875.
The facts that FRC listed Mr. Dunne as a shareholder on its
return and petitioners did not list Mr. Dunne as a shareholder on
their return are neutral when examined together because there is
no reason to believe that either return is probative.
Because Mr. Dunne had access to some of FRC’s records after
the settlement agreement but then was denied access to others,
these facts together are neutral. The most likely explanation is
the one given by FRC’s bank--that the bank was unsure whether Mr.
Dunne continued to be a shareholder after the settlement
agreement and it did not want to take unnecessary risks.
It is clear from the record that no one involved was sure
whether Mr. Dunne was a shareholder of FRC after May 8, 1997,
including Mr. Dunne himself. While we find that Mr. Dunne
believed that he was a still a shareholder in 1997 when he
thought that was his most advantageous position, his belief was
not based on a clear understanding of the law and is not
controlling. The halon contract was Mr. Dunne’s only interest in
FRC after the settlement agreement. In light of our analysis of
the above factors, we find that Mr. Dunne’s retention of an
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