Charles L. Fields and Barbara S. Fields - Page 16

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          earn interest.  CAI also had a set-off account, an escrow                   
          account, and a collateral account.                                          
               CAI's funds at the Bank earned interest in the amounts of              
          $15,582, $75,224, and $16,858 in 1980, 1981 and 1982,                       
          respectively.  Petitioners did not report any interest income               
          from the Bank on their 1980, 1981, or 1982 returns.  Respondent             
          determined that petitioners' gross income for the subject years             
          included half of the interest earned in each year.                          
          5.  Petitioners' Use of BarSon and CAI Funds                                
               In February 1979, petitioners purchased a home in Rye,                 
          New York, for approximately $160,000.  In 1980, they used $18,635           
          of BarSon's funds to pay for work performed on that home.                   
          Petitioners sold their home in Rye, New York, in July 1994, for             
          approximately $455,000.  Respondent determined that petitioners             
          received an $18,635 constructive dividend from BarSon in 1980, on           
          account of their use of its funds to pay for work done to their             
          home.  Respondent determined that BarSon's accumulated earnings             
          and profits (E&P) were $1,322,644 on March 31, 1981.                        
               BarSon reported that it paid $20,000 in business-related               
          legal fees to Finley Kumble in 1980 and 1981.  Finley Kumble                
          rendered legal advice to petitioners on personal matters                    
          including the registration requirements for acquiring a boat,               
          financing the purchase of a house in New York, and preparing a              








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