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decrease did not reflect the amount of petitioner's personal
expenses, totaling approximately $239,000, that were paid by FBI
over the same time period.
After meeting with the agents assigned to his case,
petitioner sought assistance from an accountant, G. Marshall
Burden (Burden), in preparing amended returns for FBI. Burden
relied on the prior FBI returns prepared by petitioner to arrive
at the beginning loans from stockholders balance on the amended
returns. Petitioner possessed no other documents to substantiate
the alleged loans. The loans from stockholders balance shown on
the amended returns declined in accordance with the FBI payment
of the personal expenses of both petitioner and Mathers, Jr. In
June 1989, Burden filed further amended returns to eliminate the
allocation to the loans from stockholders balance of Mathers,
Jr.'s personal expense payments in prior years.
OPINION
Petitioner contends that the amounts he received from FBI
were in repayment of loans he made to FBI, and, therefore, those
amounts are not taxable to him. He claims that he had no
obligation to file tax returns for the years in issue because he
had no taxable income.
Respondent contends that the payments from FBI for the
benefit of petitioner and his son constituted constructive
dividends and are taxable to petitioner. Respondent further
argues that petitioner knew that these payments were income to
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