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provided by YOC for purchase of the Capriole represented a
constructive dividend to Elvin. Respondent also determined that
the Capriole was used by Elvin solely for his personal benefit.
Respondent disallowed all of the $90,635 and $133,179 for 1984
and 1985 that were claimed by YOC as business expenses relating
to the Capriole, and respondent determined that YOC's payment of
these expenses represented constructive dividends to Elvin.
The Sea Ray Boat
On October 1, 1981, YOC transferred to Elvin $9,575 for
purchase from one of YOC's employees of a used 22-foot Sea Ray
Boat (Sea Ray Boat). The Sea Ray Boat was purchased by Elvin for
Elvin's personal use.
The Sea Ray Boat was listed on YOC's books and records as an
asset and was included in YOC's used car inventory.
The Sea Ray Boat was used by Elvin, Elvin's son Buddy, and
their friends for personal recreation. A log was not maintained
relating to use of the Sea Ray Boat, and the evidence in the
record does not reflect any business use of the Sea Ray Boat.
During 1983, YOC paid $1,155 for maintenance, repairs, and
operation of the Sea Ray Boat. For income tax purposes, YOC did
not deduct this $1,155 as a business expense.
During 1983, 1984, and 1985, in addition to the above
$1,155, YOC paid and did claim business expense deductions of
$2,077, $3,837, and $1,228, respectively, relating to the Sea Ray
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