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The Sylva Residence was sold in February of 1991, and a
small loss resulted from the sale.
On audit, respondent determined that the full $65,000
transferred from YOC to Yarbrough Leasing for purchase of the
Sylva Residence represented a constructive dividend from YOC to
Elvin, followed by a capital contribution of $65,000 from Elvin
to Yarbrough Leasing.
Claimed Travel and Entertainment Expenses
During 1983, 1984, and 1985, miscellaneous personal expenses
of Elvin and of Mrs. Yarbrough were paid by YOC, and these
expenses were claimed on YOC's corporate Federal income tax
returns as deductible business travel and entertainment expenses.
On audit, a portion of these claimed travel and entertainment
expenses was disallowed by respondent and treated as constructive
dividends to Elvin in the amounts set forth below:
Amount Disallowed
T and E Expenses and Treated
Claimed as Constructive
Year on YOC's Return Dividends to Elvin
1983 $31,048 $22,014
1984 18,209 14,012
1985 30,510 22,080
Petitioners did not introduce any records or other credible
evidence in support of the proposition that the above disallowed
travel and entertainment expenses qualified as deductible
business expenses of YOC or that they did not represent
constructive dividends to Elvin.
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