The Treatment of Nominee Corporations for Income Tax Purposes

This Article traces the development of the nonentity and agency approaches to the treatment of nominee corporations. The nonentity approach had a short lifespan and is of little use today. The agency approach, in contrast, experienced a period of development that resulted in a complex six-factor test that was employed in at least three circuits. When a conflict in the application of the six-factor test developed, the Supreme Court in Commissioner v. Bollinger enunciated a different approach and established a new, more workable standard.

This Article explores the limitations of that standard as well as its practical application for planners.