- 15 -
treat the payments of petitioner's personal expenses as loan
repayments.
Petitioner's attempts to characterize retroactively the
payments he received from Allied as loan repayments are not
persuasive. See Noble v. Commissioner, 368 F.2d 439 (9th Cir.
1966), affg. T.C. Memo. 1965-84. The pattern of payments from
Allied for petitioner's benefit is more consistent with
constructive dividends. See Reis v. Commissioner, T.C. Memo.
1995-231; Cordes v. Commissioner, T.C. Memo. 1994-377.
Petitioner contends that Allied did not have earnings and
profits from which to pay a dividend in 1988 or 1989. Respondent
concedes that Allied did not make a profit in 1988. However,
respondent argues that petitioner has failed to show that there
were no historical earnings available in 1988. Petitioner argues
that Allied was only a corporate shell between its incorporation
in 1986 and 1988 and that no historical earnings could exist.
Petitioner's contention is not supported by any evidence in the
record. Petitioner has not met his burden of proving that Allied
had insufficient earnings and profits to support the distribution
of dividends, to the extent determined by respondent, during the
years in issue. Truesdell v. Commissioner, 89 T.C. 1280, 1295
(1987); see Rescigno v. Commissioner, T.C. Memo. 1991-479;
Malicki v. Commissioner, T.C. Memo. 1988-559, affd. sub nom. Gold
Emporium, Inc. v. Commissioner, 910 F.2d 1374 (7th Cir. 1990).
Page: Previous 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 NextLast modified: May 25, 2011