- 88 -
accumulated or current earnings and profits.26 Sec. 316(a). A
distribution taxable as a dividend under section 301 may be found
even though the corporation has not formally declared a dividend
or even intended to distribute a dividend. Loftin and Woodard,
Inc. v. United States, 577 F.2d 1206, 1214 (5th Cir. 1978);
Crosby v. United States, 496 F.2d 1384, 1388 (5th Cir. 1974);
Hash v. Commissioner, 273 F.2d 248, 250 (4th Cir. 1959), affg.
T.C. Memo. 1959-96. Accordingly an expenditure made by a
corporation for the personal benefit of one of its shareholders,
or the personal use of corporate property by a shareholder, may
result in the shareholder’s being treated as having received a
constructive dividend. Ireland v. United States, 621 F.2d 731,
735 (5th Cir. 1980); Commissioner v. Riss, 374 F.2d 161, 170 (8th
Cir. 1967), affg. on this issue and revg. on another issue T.C.
Memo. 1964-190; Challenge Manufacturing Co. v. Commissioner, 37
T.C. 650, 663 (1962), and opinions there cited. See also Old
Colony Trust Co. v. Commissioner, 279 U.S. 716 (1929).
In determining whether constructive dividends have been
received, the key factors are whether the shareholders received
26 Petitioner has not argued that Markette’s earnings and
profits for 1983 through 1986 were insufficient to cover any of
the determined constructive dividends. Thus, we do not
redetermine the amounts of the relevant earnings and profits, nor
do we address the “wrongful diversion” and sec. 312 issues dealt
with in Hagaman v. Commissioner, 958 F.2d 684, 692 (wrongful
diversion), 695 (sec. 312) (6th Cir. 1992), affg. and remanding
T.C. Memo. 1987-549.
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