- 34 -
Memo. 1964-190; Melvin v. Commissioner, 88 T.C. 63 (1987), affd.
per curiam 894 F.2d 1072 (9th Cir. 1990); Challenge Manufacturing
Co. v. Commissioner, 37 T.C. 650, 663 (1962); American
Properties, Inc. v. Commissioner, 28 T.C. 1100, 1115 (1957),
affd. 262 F.2d 150 (9th Cir. 1958). In addition, the corporation
will not be allowed to deduct costs of owning and maintaining
property and other expenses that are attributable to personal use
of the property by the shareholders. United Aniline Co. v.
Commissioner, 316 F.2d 701, 705 (1st Cir. 1963), affg. T.C. Memo.
1962-60; Challenge Mfg. Co. v. Commissioner, supra at 663.
In determining whether constructive dividends have been
received by a shareholder, the key factors to consider are
whether the shareholder received economic benefit from the
corporation without expectation of repayment therefor and whether
corporate benefits made available to the shareholder represented
benefits primarily of a personal nature and did not relate to the
business of the corporation. Ireland v. United States, supra at
735; Loftin & Woodard, Inc. v. United States, supra at 1215-1217.
A mere declaration by a shareholder that a withdrawal was
intended as a loan is insufficient if the transaction fails to
meet more reliable indicia of debt. Williams v. Commissioner,
627 F.2d 1032, 1034 (10th Cir. 1980), affg. T.C. Memo. 1978-306;
Alterman Foods, Inc. v. United States, 505 F.2d 873, 876 (5th
Cir. 1974).
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