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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 to
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