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will not result in constructive dividends to a common shareholder
solely by reason of the common ownership. Sammons v.
Commissioner, 472 F.2d 449, 451 (5th Cir. 1972), affg. in part
and revg. in part on rehearing T.C. Memo. 1971-145. The transfer
must be for the personal benefit of the common shareholder, and
the resulting benefit must be more than incidental. Rapid Elec.
Co. v. Commissioner, 61 T.C. 232, 239 (1973); Ross Glove Co. v.
Commissioner, 60 T.C. 569, 595 (1973); Rushing v. Commissioner,
52 T.C. 888, 893 (1969), affd. 441 F.2d 593 (5th Cir. 1971).
The constructive dividend theory is used to prevent the
siphoning of corporate profits under the guise of a sale or other
transfer of assets by placing any transfer between related
corporations on a tax parity with arm’s-length dealings between
unrelated parties. Champayne v. Commissioner, 26 T.C. 634, 645
(1956). Thus, both the bona fide nature of the transaction and
the reasonableness of the payments require consideration. Id.
Where the evidence is sufficient to establish that the
transaction was bona fide and conducted in an arm’s-length
manner, then the ultimate objective of the constructive dividend
theory has been attained, and it is unnecessary for us to
independently determine the value of the property transferred.
Sparks Nugget, Inc. v. Commissioner, 458 F.2d 631, 635 (9th Cir.
1972), affg. T.C. Memo. 1970-74; Place v. Commissioner, 17 T.C.
199, 203 (1951), affd. 199 F.2d 373 (6th Cir. 1952). Whether a
transaction is bona fide and arm’s length is a question of fact,
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