- 47 -
transferred that amount as a capital contribution to Yarbrough
Leasing in order to provide Yarbrough Leasing the funds necessary
to purchase the Sylva Residence. See Sammons v. Commissioner,
472 F.2d 449 (5th Cir. 1972), affg. in part and revg. in part
T.C. Memo. 1971-45.
In calculating the amount of the constructive dividend to be
charged to Elvin relating to the Sylva residence, respondent did
not give Elvin credit for a $50,000 repayment that was made by
Elvin or by Yarbrough Leasing the day after the $65,000 was
transferred to Yarbrough Leasing. This treatment by respondent
is inconsistent with the treatment that respondent gave to
payments made by Elvin on the debit balance in the YOC-Elvin
Account. As explained, respondent, with regard to the YOC-Elvin
Account, in each year charged Elvin only with constructive
dividends for the annual net increase in the outstanding balance
on the YOC-Elvin Account.
We conclude that only $15,000 of the $65,000 (namely, the
$65,000 transferred by YOC to Yarbrough Leasing less the $50,000
repayment) relating to the Sylva Residence should be treated as a
constructive dividend to Elvin.
Travel and Entertainment Expenses -- Claimed Business Expenses
and Constructive Dividends
Petitioners argue that for 1983, 1984, and 1985, the
expenses of $22,014, $14,012, and $22,080, respectively, incurred
by YOC for Elvin's travel and entertainment qualify as valid
Page: Previous 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56 NextLast modified: May 25, 2011