dissenting.
I respectfully dissent from the decision of the majority because I believe that it *145creates a loophole which may be used as a shield against discovery from corporate parties. As the majority recognizes, the linchpin of the Tax Court’s decision is its conclusive presumption that Gerling had sufficient control over Universale to make arrangements on behalf of GIIC to allow the IRS to review Universale’s books and records.
In order to ascertain the extent of Ger-ling’s control over Universale, the Commissioner directed interrogatories to GIIC on that issue. GIIC admitted that Gerling has been Chairman of Universale’s Board of Directors from January 1, 1976 to the present and “performed the tasks normally associated” with that position. However, it failed to provide any information about the amount of Gerling’s stock ownership beyond stating that he is a shareholder. The Commissioner, after additional efforts to obtain the information, sought sanctions. The Tax Court, after hearings, entered the order establishing the presumption that Gerling owned substantially all of Univer-sale's stock. I agree with the majority that the validity of that presumption depends on whether Gerling’s knowledge about his stock ownership in Universale is properly imputable to GIIC.
The majority, departing from the generally accepted principle that knowledge of the principal corporate officers is considered to be knowledge of the corporation, permits a bifurcation of a corporate officer’s knowledge and requires the officer to disclose only information acquired as an agent of the corporation. Surely the majority is not suggesting that a corporation whose officers engaged in price-fixing may disclaim knowledge of those activities because they were conducted outside the authorized scope of the agent’s duties for the corporation. However, because a corporation only knows what its agents know, once the bifurcation principle is accepted, it may preclude discovery of relevant facts known by those agents.
This case does not present the more troublesome question of whether a corporation may be held accountable for information known to its independent directors through other sources. Nor is this a case where a corporate officer seeks to insulate truly private and unrelated information from corporate inquiry. In the situation before us, not only is Gerling the chief executive and operating officer of GIIC, and as such owes it his undivided loyalty, but also the information requested is relevant to the interrelationship between GIIC and Universale, and hence related to the business of GIIC. In fact, the substantive issue in this case relates to the connection between GIIC and Universale, and whether that was used to shield from taxes income imputable to GIIC. I find it difficult therefore to accept the majority’s view that Gerling’s position as a shareholder and Board Chairman of Universale, the company that was apparently the only source of GIIC’s business, did not have “anything to do with the business of GIIC.” Majority at 139. For example, if Gerling knew from his position at Universale that it was underpaying GIIC on its net profits, I assume that he could not have, consistent with his duty to GIIC, failed to disclose that fact. Therefore, he had a corresponding duty to provide GIIC with the relevant information about his own stock interest in Universale. The relevant knowledge of the corporation’s principal officer cannot be divorced from that of the corporation.
I fail to understand how the majority proposes that the IRS could proceed to “further develop[] the record concerning the relationships among Gerling, GIIC, and Universale.” Majority at 144. Instead, I believe the majority’s position makes further discovery on this issue fruitless. It seems to me that given GIIC’s refusal to provide the information requested, the Tax Court was entitled to make the presumption that Gerling owned the majority of Universale’s stock. Accordingly, I would affirm.
I note, however, that I fully agree with the majority’s analysis of the relevant tax provisions and procedure set forth in Part V. of its opinion.