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analysis when there is other evidence that connects petitioner to
the diverted and unreported funds. Petitioners have not
convinced us that respondent's determination was arbitrary. We
therefore presume that respondent's determination is correct.
D. Whether Petitioners Received Constructive Dividends
1. Respondent's Determination
Respondent determined that petitioners received but did not
report constructive dividends from 1963 to 1970 which resulted in
the following deficiencies: $180,853.16 for 1963, $225,591.07
for 1964, $67,160.06 for 1965, $241,895.20 for 1966, $98,213.03
for 1967, $221,132.70 for 1968, $258,763.57 for 1969, and
$17,945.61 for 1970. Respondent based the determination on funds
that petitioner diverted to petitioners' benefit through the
Polymer and Chemical Traders bank accounts and on petitioners'
personal expenses that Resyn paid. Petitioners did not report
these items on their income tax returns. Respondent's
determination is presumed to be correct. Welch v. Helvering,
supra at 115; Rule 142(a).
2. Diversion of Funds to Polymer Account
Petitioners contend that petitioner's diversion of funds to
the Polymer bank account was not a constructive dividend to them
because petitioner used those diverted funds to pay business
expenses. Petitioner testified that the alkyd resin business was
very competitive during the years in issue and that the Tepperman
brothers told him that they would give him business from Atlas if
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