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As a result of the above transaction, Elvin, in 1986, as
controlling shareholder of YOC, effectively withdrew $325,939
from YOC and, as a 50-percent shareholder of NRDC, made a capital
contribution of that amount to NRDC to enable NRDC, along with
Koons' matching contribution of approximately $325,939, to
purchase the above-referred-to real property.
On audit, respondent determined that for each year in issue
the yearend net increase over the prior year in the debit balance
of the YOC-Elvin Account represented a constructive dividend to
Elvin. The net increases for 1983, 1984, 1985, and 1986, treated
by respondent as constructive dividends to Elvin (limited by
YOC's annual earnings and profits), were $137,673, $17,510,
$64,825, and $180,906, respectively.
The Yacht Capriole
On or about August 6, 1984, a used 60-foot motor yacht named
the Capriole was purchased from David M. Ponce (Ponce) for
$80,000 in cash. Elvin created a false invoice reflecting that
Ponce traded in the Capriole to YOC in exchange for a 1983
Oldsmobile Firenza with a stated value of $5,500. Elvin, using
YOC's funds, made a cash downpayment to Ponce of $5,000, and then
applied to Barnett Bank of St. John's County (Barnett Bank) for
an $80,000 loan, nominally on behalf of YOC, to provide the
remaining funds for purchase of the yacht. With regard to the
$80,000 loan application, on September 27, 1984, Elvin signed a
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