Raymond R. Weigel - Page 10

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          with that charged for similar parcels of real estate in the same            
          locale.  Additionally, petitioner intended that the duration of             
          the lease extend well beyond the month-to-month term indicated in           
          the document.  Thus, as in Bardes, the expenditures incurred by             
          petitioner's corporation were in fact made pursuant to bona fide            
          business transactions between petitioner and Goshorn.  Conse-               
          quently, we hold that petitioner did not realize dividend income            
          as a result of Goshorn's expenditures for leasehold improvements.           
          Loans                                                                       
               A distribution by a corporation to a shareholder constitutes           
          a loan, rather than a constructive dividend, if, at the time of             
          its disbursement, the parties intended that the shareholder repay           
          the loan.  Crowley v. Commissioner, 962 F.2d 1077, 1079 (1st Cir.           
          1992), affg. T.C. Memo. 1990-636; Wiese v. Commissioner, 93 F.2d            
          921 (8th Cir. 1938), affg. 35 B.T.A. 701 (1937); Miele v. Commis-           
          sioner, 56 T.C. 556, 567 (1971), affd. without published opinion,           
          474 F.2d 1338 (3d Cir. 1973).  The issue of whether a transfer by           
          a corporation to a shareholder constitutes a loan or a                      
          constructive dividend is a factual issue, which "depends pri-               
          marily upon the good-faith intention of the shareholder to repay            
          the amounts received and the intention of the corporation to                
          require repayment."  J.A. Tobin Constr. Co. v. Commissioner, 85             
          T.C. 1005, 1022 (1985).  Transfers to a shareholder of a closely            
          held corporation require special scrutiny because of the                    
          unfettered control exercised by that shareholder.  Id.  Peti-               




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