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Issue 2. Corporate Payments: Taxable Corporate Distributions or
Nontaxable Loan Repayments
(a) Amounts of payments
After generous allowances by respondent, and respondent's
concessions on advertising expenses, see last sentence of note 8
supra, the amounts of GAPS’s and JJM’s payments to petitioner or
for his benefit were $104,564 and $39,553, respectively.
Petitioners did not present any evidence of the amounts of
money and other property that GAPS and JJM paid to petitioner, or
on his or his family's behalf. The Mancusos have not met their
burden of proving that respondent’s determinations of the amounts
of the corporate payments are incorrect.9
(b) Loan Repayments or Taxable Distributions
A corporate payment to, or on behalf of, a shareholder is a
corporate distribution if it is a payment made with respect to
the shareholder’s stock. Sec. 301(a). Petitioner contends that
the amounts GAPS and JJM paid to him, or paid on his behalf, were
nontaxable repayments of loans.
Whether the GAPS and JJM payments to petitioner were
distributions with respect to their stock or loan repayments
9These amounts included respondent's determination that
petitioner received constructive distributions through purported
corporate commissions paid to his children by GAPS and JJM.
After testimony by one of his children on this issue, which
seriously undermined his credibility, petitioners conceded this
issue at trial. Petitioners presented no other evidence on the
amount of distributions.
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