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2. Dividend Income
Respondent determined that petitioner had dividend income
from petitioner corporation in 1987 as follows:
Debt cancellation
(forgiveness of debt) $130,230
Use of property and loans
(increase in loan by 6/30/87) 346,381
Total 476,611
Respondent conceded that $132,387 of this amount was an MTS
bookkeeping error and that $150,000 was transfers from petitioner
to petitioner corporation. The parties continue to dispute
whether petitioner received $194,224 of dividend income.
Petitioner bears the burden of proving that these payments
were not dividend income. Rule 142(a); Welch v. Helvering, 290
U.S. at 115. A dividend is a distribution of property by a
corporation to its shareholders from its earnings and profits.
Sec. 316(a). Gross income includes dividends. Sec. 61(a)(7).
Petitioner contends that he made unreimbursed cash advances,
including mortgage payments, on petitioner corporation’s behalf.
He said that he thought the amount of the cash advances was
“around $30,000”. Petitioner’s only evidence on this issue was
his vague testimony.
Petitioner’s documents, which we discussed above at par. B-1
(pp. 14-15), included one check which was in the amount of
$1,590.53 and purported to be a mortgage payment written by
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