This is just a phase that he's going thru and by the time he gets done, you'll be an expert on how to be a creative dislapinarian (sorry about the spelling). I have three of those unique creatures except mine are 16, 15 and 12. I've gone thru all of this and then some. Before my husband and I started having kids, we had used to love watching things like National Geo., in fact it was always the ones about animal behavior. The thing that came out in almost every one was that the male cubs exhibited the domincey over the female cubs in everything they did, whats yours in mine and whats mine is mine. Now fast forward a few years and insert kids. I began to realize that some of the same rules applied to these strange but very lovable little creatures. I've gone thru the "what's mine is mine, what's yours is mine and I will scream at the top of my lungs to get that point across and I don't care if I haven't touched it in weeks or you haven't touched it in weeks, it's still mine". I know that is seems hard right now, but you're on the right track, but instead of putting the child (who is still a little young to grasp the full effect of doing a time out, wait a few months) in timeout, put the toy in timeout for a few minutes, then give it back to the right child. Explain to him in very simple terms that what he had done was wrong and then since you say that he does sit in time out, have him do his time out sitting next to you or on your lap, it might be that he needs an extra hug or a little tlc at that moment. Now remember that all the advise is just that. No one is right on the button and no one is wrong either. Remember also that these two will change behaviors faster than you can change your socks. What you will glean from all the advice, keep locked away in your mind because you'll be able to use it all thru their years with you. What ever you choose to use at this moment, use it all the time and stand your ground. But as they grow older, change what you use.