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machines, in part, because they did not own or show their
ownership of the machines.
Respondent proposed several arguments in response to
petitioners’ argument that they are not required to report the
income if we find, as we did, that they did not own the vending
machines. Respondent argued that payments made to third parties
on behalf of a corporation’s sole shareholder are income to the
shareholder. That argument is inapposite with respect to the
amounts petitioners reported on their 1986 and 1989 returns as
income from the vending machines that they believed they owned.
In another part of this opinion we address the question of
whether payments made to or on behalf of petitioners are income
to them and should have been reported by them.
Respondent also argued that petitioners constructively
received the income from the vending machines and income from the
sale of the Crestwood property. As to the constructive receipt,
respondent does not contend that petitioners specifically
received the $163,001 or $72,817 amounts from the corporations or
that those amounts are constructive dividends. Although the
record reflects that petitioners are required to report certain
income they received as compensation or because the
corporation(s) paid petitioners’ obligations, that matter is also
addressed in another portion of this opinion. Attribution of the
amounts reported as vending machine receipts to the amounts
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