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Additional Personal Expenses of Elvin Paid by YOC
and Claimed by YOC as Deductible Business Expenses
During 1983 through 1986, YOC paid numerous additional
personal expenses of Elvin that were claimed by YOC as deductible
business expenses. Elvin instructed YOC's employees to pay these
expenses and to reflect these expenses in YOC's books and records
as YOC's business expenses.
The schedules below set forth by year the amount of these
additional personal expenses of Elvin that YOC paid and claimed
as deductible business expenses. The schedules also indicate the
manner in which these expenses were reflected in YOC's books and
records and the benefit that Elvin received as a result of the
expenses. On audit, respondent disallowed the business expense
deductions claimed by YOC with respect to the expenses set forth
in the schedules, and respondent treated them as constructive
dividends to Elvin. In a number of instances (identified as "Not
deducted" in the column reflecting the manner in which the
expenses were treated on YOC's books), respondent determined
(with respect to certain expenses that were paid by YOC for
Elvin's benefit but not deducted as business expenses by YOC)
that such expenses represented constructive dividends to Elvin.
The schedule also reflects which expenses petitioners now concede
should be treated as nondeductible personal expenses and as
constructive dividends to Elvin.
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