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interest in this real property, which was purchased in the name
of NRDC. Elvin and Koons were the sole shareholders of NRDC. We
do not find it particularly significant that in 1987 YOC's
outside accounting firm transferred the $325,939 debit from the
YOC-Elvin Account to an account receivable due from NRDC in that
amount.
There is no credible evidence that the $325,939 debited in
1986 to the YOC-Elvin Account was intended to be a loan to NRDC.
Petitioners did not introduce into evidence any books and records
of NRDC supporting their argument that the $325,939 was intended
to be a loan to NRDC, and there was no explanation at trial as to
why the records of NRDC were not produced at trial. Further,
there is no indication in YOC's books and records indicating that
NRDC made any repayments to YOC of the $325,939.
We conclude that the $325,939 that YOC provided for purchase
of the real property should be treated as a constructive dividend
to Elvin, followed by a $325,939 contribution by Elvin to the
capital of NRDC. See Sammons v. Commissioner, 472 F.2d 449 (5th
Cir. 1972).
Many of the credits or repayments reflected in the YOC-Elvin
Account related to YOC's declaration of salary adjustments or
bonuses to Elvin. These credits are not entitled to significant
weight in our consideration of how to treat the annual net
increase in the YOC-Elvin Account. See Epps v. Commissioner,
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