- 42 -
T.C. Memo. 1995-297; Boecking v. Commissioner, T.C. Memo. 1993-497.
We conclude that the annual net increase each year in the
outstanding debit balance of the YOC-Elvin Account is to be
treated as a constructive dividend to Elvin. Respondent gave
Elvin credit for all repayments reflected in the YOC-Elvin
Account during the years in issue. We agree with respondent's
determination of the amount of constructive dividends charged to
Elvin. We conclude and hold that Elvin received from YOC
constructive dividend income for 1983, 1984, 1985, and 1986 of
$137,673, $17,510, $64,825, and $258,939 (the taxable portion of
which for 1986 is limited to $196,042 as a result of YOC's 1986
earnings and profits), respectively, relating to the annual net
increase in the YOC-Elvin Account.
The Yacht Capriole -- Claimed Business Expenses
and Constructive Dividends
Petitioners note that title to the Capriole was held in the
name of YOC, and petitioners argue that Elvin entertained
business associates and potential customers on the Capriole, that
business discussions with YOC employees were conducted on the
Capriole, that the Capriole was used a majority of the time for
business, and that YOC did not attempt to sell the Capriole
because YOC expected to make a profit in later years on
appreciation of the Capriole.
Elvin is to be treated as owner of the Capriole. Elvin
purchased and used the Capriole solely for personal use. During
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