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735 (5th Cir. 1980); Loftin & Woodard, Inc. v. United States,
supra at 1214; Melvin v. Commissioner, 88 T.C. 63 (1987), affd.
894 F.2d 1072 (9th Cir. 1990); see also Old Colony Trust Co. v.
Commissioner, 279 U.S. 716 (1929) (payment of taxes by
corporation constitutes additional income to taxpayer). Key to
the test of the taxability of a distribution as a dividend is
whether the shareholder receives an economic benefit from the
corporation without any expectation of repayment, and whether the
benefit is primarily of a personal nature, unrelated to the
corporation's business. Ireland v. United States, supra at 735;
Loftin & Woodard, Inc. v. United States, supra at 1215-1217.
Under the facts at hand, we conclude that petitioners
received an economic benefit from CAI, which they assumed no
obligation to repay. Petitioners used BarSon's funds for their
personal purposes, and petitioner was a 50-percent shareholder of
the two-shareholder corporation. Although petitioners claim that
some of these funds (the $1,000 in checks and the $18,635 used
for home improvements) were lent to petitioner by BarSon for his
personal use, the record does not support this naked assertion.
We are unpersuaded that BarSon and petitioners intended for
petitioners to pay back any of the funds that they used for their
personal benefit. See Litton Business Sys., Inc. v.
Commissioner, 61 T.C. 367, 377 (1973). Because petitioners used
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