- 10 - 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-Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 Next
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