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Accu-Data--Constructive Distribution
Respondent contends that during 1989 Mr. Morris received a
constructive dividend from Accu-Data in the amount of $11,504,
which was the amount of the year-end total retained earnings of
Accu-Data that was reflected in the balance sheet in the Form
1120S that it filed for 1988. Although petitioner does not
dispute that during 1989 Mr. Morris received a constructive
distribution of $11,504 from Accu-Data, she contends that the
amount of that distribution that constitutes a dividend is
limited to $4,287, since that was the amount of Accu-Data's total
retained earnings at the time of that distribution.
To support that contention, petitioner asserts that during
1981 and 1982 Accu-Data, a stockholder of TPI, lent TPI a total
of $12,300, that those alleged loans became worthless sometime
thereafter but prior to 1989, and that Accu-Data's earnings and
profits as of the beginning of 1989 must be reduced to reflect
that worthless debt. Respondent counters that the $12,300 that
Accu-Data transferred to TPI was a contribution to its capital.
The only items of evidence supporting petitioner's conten-
tion that Accu-Data lent TPI $12,300 are Mr. Morris' testimony, a
purported reconciliation that he prepared, and some checks and
bank statements. We are not persuaded by, and are unwilling to
rely on, that evidence to establish that Accu-Data lent TPI a
total of $12,300, rather than contributing that amount to its
capital. In this regard, we note that TPI was not a stockholder
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