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petitioner for petitioner corporation, and various hotel,
restaurant, and transportation receipts which lacked complete
dates (i.e., the year was missing), or failed to adequately show
the business purpose or to show that the statement of business
purpose was made contemporaneously. Even if we had admitted
petitioner’s exhibits, they would not have substantiated
petitioner’s claim that he made payments to or on behalf of
petitioner corporation.
Petitioner offered no evidence that the debts were not
canceled, that he did not make withdrawals from petitioner
corporation, that the amounts were repaid, or that the
withdrawals and debt cancellations were not taxable dividends to
him. Sec. 6001; Rule 142(a). Petitioner’s records were totally
inadequate to convince us that he made unreimbursed payments of
mortgage and other expenses of petitioner corporation. However,
petitioner’s testimony convinces us that he made some cash
advances to petitioner corporation. We find that $30,000 of the
$194,224 in dispute was not dividends from petitioner corporation
to petitioner.
Petitioner corporation had retained earnings in 1987 of
$324,670, which is enough to establish that the cash advances to
petitioner were dividends. Sec. 316(a). Petitioner has not
shown that petitioner corporation did not have enough retained
earnings to support respondent’s determination that he received
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