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States, 460 F.2d 412, 419 (5th Cir. 1972); Sammons v. United
States, 433 F.2d 728, 730 (5th Cir. 1970). To determine whether
petitioner should be taxed on the receipt of FBI funds by
Mathers, Jr., we take into account "whether the taxpayer has
exercised substantial influence over the corporate action whose
tax consequences are at issue." Green v. United States, supra at
420.
Petitioner, as president and 97-percent shareholder in FBI,
had the power to control the distribution of FBI funds.
Petitioner admitted that he had control over the FBI checking
account. Petitioner possessed the power to require Mathers, Jr.
to stop writing personal expense checks on the FBI account.
Petitioner chose not to use this power. Instead, petitioner
furnished Mathers, Jr. with complete access to FBI funds and
knowingly permitted Mathers, Jr.'s use of those funds for his
personal expenses.
The facts of this case are similar to the situation
presented in Nicholls, North, Buse Co. v. Commissioner, 56 T.C.
1225 (1971). In that case, the taxpayer was president and 50-
percent shareholder in a corporation. The taxpayer played a very
important role in the corporation's acquisition of a boat.
His sons, with his knowledge, frequently used the boat for
nonbusiness purposes. The Court found that the taxpayer received
a constructive dividend from the use of the boat by his sons,
because he "was in complete control of the events". Id. at 1240.
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