Tax Legal Services · Primary-source case analysis

Bollinger: A Corporate Nominee Was Disregarded When a Genuine Agency Was Fully Documented

By Aneeta Mishra and Timothy Chan

Published May 19, 2026 · Updated October 17, 2026

Decision: Comm’r v. Bollinger, 485 U.S. 340 (1988).

Commissioner v. Bollinger addressed apartment projects placed in a corporation’s name solely to meet lenders’ requirements under Kentucky’s then-existing usury constraints.

The agency was documented at acquisition

The first lender offered financing at eight percent, but Kentucky then capped noncorporate borrowing at seven percent. A written agreement made the corporation a titleholding agent to obtain financing and reserved control and responsibility to the actual owner. The Court’s agency analysis depended on the agreement existing when the asset was acquired, not on a later tax-year choice. Bollinger, 485 U.S. at 342, 345–346, 349–350.

The corporation acted only as agent

The owners managed construction and operations, received rents and paid expenses through their accounts, and reported income and losses. For the later ventures, the nominee had no employees or bank accounts of its own. Those operational facts supported the written role; an agent label alone did not. Bollinger, 485 U.S. at 342–344.

Third-party treatment matched the agreement

The same account had to hold outside the tax return. Lenders, contractors, managers, employees and tenants understood the actual owners’ role and the nominee’s limited role, if they knew of the nominee at all. The Court found the agency genuine in both form and substance. Bollinger, 485 U.S. at 345.

An arm’s-length fee was not indispensable

The Court accepted the need for unequivocal proof to prevent owners choosing whichever tax identity later proved cheaper. It nevertheless rejected mandatory arm’s-length bargaining and an agency fee as the only acceptable proof. Contemporaneous documentation, consistent agent-only conduct and consistent third-party treatment were sufficient here. The Court affirmed the Sixth Circuit; it did not authorize disregarding every controlled corporation. Bollinger, 485 U.S. at 346, 349–350.

Key takeaways

• Execute the agency agreement when the asset is acquired.
• Limit the nominee’s authority to the written agency purpose.
• Ensure operations, books, returns, and third-party dealings match the stated relationship.
• Preserve lender requirements and the current, jurisdiction-specific reason for the nominee; do not assume the old Kentucky lending rules still apply.