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YOC's Taxable Income
Underreported
Income
As Reported As Determined as Determined
Year by YOC by Respondent by Respondent
1983 $132,021 $205,171 $73,150
1984 410,227 449,567 39,340
1985 308,762 382,932 74,170
For 1983, 1984, and 1985, respectively, the underreported
income as determined by respondent was attributable to disallowed
claimed business expenses of $73,150, $39,340, and $74,170.
Respondent also determined that for 1983, 1984, and 1985,
YOC was liable for the fraud additions to tax, increased interest
relating to fraud, and for the substantial understatement
additions to tax.
OPINION
Claimed Business Expenses and Constructive Dividends
Numerous court opinions establish that if shareholders of a
corporation receive corporate funds or corporate property for
personal use, they will be charged with distributions from the
corporation, taxable to them as constructive dividend income if
the corporation has sufficient earnings and profits. Ireland v.
United States, 621 F.2d 731, 735 (5th Cir. 1980); Loftin &
Woodard, Inc. v. United States, 577 F.2d 1206, 1214 (5th Cir.
1978); Commissioner v. Riss, 374 F.2d 161, 166-167 (8th Cir.
1967), affg. in part, revg. in part, and dismissing in part T.C.
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