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on petitioners' home. Respondent determined that the 1981
dividend resulted from: (1) BarSon's payment of $7,500 to Finley
Kumble for petitioners' personal legal fees, (2) BarSon's payment
of $2,728 for petitioners' personal promotion expense,
(3) BarSon's payment of $6,987 for petitioners' personal travel,
and (4) petitioners' personal use of an automobile ($2,295).
Petitioners allege that: (1) BarSon's $2,500 payment in 1980 was
for professional fees rendered to BarSon, (2) the $1,000 and
$18,635 amounts were charged to petitioner's loan account, and
later repaid, (3) BarSon's $7,500 payment in 1981 was for
professional fees rendered to BarSon, and (4) the $2,728, $6,987,
and $2,295 amounts were ordinary and necessary business expenses
of BarSon.
We agree with respondent that the subject amounts are
includable in petitioners' gross income as dividends.
A shareholder's gross income includes his or her receipt of any
dividend, regardless of whether the dividend was formally
declared by the corporation. Sec. 61(a)(7); Loftin & Woodard,
Inc. v. United States, 577 F.2d 1206, 1214 (5th Cir. 1978).
Where a shareholder receives a distribution of corporate funds
for his or her personal benefit, the distribution may be taxed to
the shareholder as a dividend to the extent of the corporation's
earnings and profits. Ireland v. United States, 621 F.2d 731,
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