- 14 - Allied's Payment of Petitioner's Personal Expenses Respondent determined that Allied's payment of petitioner's personal expenses in the amounts of $44,855.00 and $35,604 in 1988 and 1989, respectively, was includable in petitioner's gross income. After a concession by respondent, the amounts remaining in dispute are $40,859 and $31,608 for 1988 and 1989, respectively. Petitioner contends that Allied's payments of his personal expenses were nontaxable loan repayments. Respondent contends that these payments were dividends or, in the alternative, wages. At trial, the evidence that was introduced by petitioner consisted mainly of his uncorroborated testimony. We are not required to accept testimony that is improbable or vague. See Geiger v. Commissioner, 440 F.2d 688, 689-690 (9th Cir. 1971), affg. T.C. Memo. 1969-159. Petitioner's testimony is not supported by the minimal records produced at trial and is not consistent with the contemporaneous corporate records. Allied's 1988 Schedule L, Balance Sheet, indicates that at the end of 1988 $75,000 was outstanding as shareholder loans and that liabilities and shareholders' equity totaled $129,168. Allied's 1989 Schedule L does not indicate any amount outstanding as shareholder loans at the beginning of 1989. However, beginning liabilities and shareholders' equity totaled $129,168. Ending liabilities and shareholders' equity for 1989 totaled $112,746. We conclude that Allied did not have a contemporaneous intent toPage: Previous 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 Next
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