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either neutral or do not outweigh the circumstances set forth
above that indicate that the 1981 transaction effected a
contribution to Associates' capital rather than a loan.
Moreover, petitioner has neither shown nor argued that the
distribution to him cannot be characterized as a dividend in
whole or part because Associates lacked earnings and profits.
Consequently, we shall assume that Associates had sufficient
earnings and profits for purposes of this case. Based on our
consideration of the entire record, we find that the distribution
received by petitioner from Associates during 1988 constituted a
dividend rather than a repayment of a loan.
We next consider the amount of the dividend distributed by
Associates. Respondent determined that the amount of the
dividend was $125,000, based on the 1987 corporate return, which
reported a decrease in loans to Associates from its shareholder
in that amount. Petitioner admits that he received $117,164.91,
an amount to which the parties have stipulated, but contends,
relying on his testimony, that he received no more than that
amount. Petitioner could not explain why the 1987 corporate
return reported the $125,000 decrease in liabilities.
Although petitioner's testimony concerning the transactions
in issue lacked sufficient detail in some respects, we found him
to be credible. Moreover, the information reported on the
corporate returns that purportedly reflects the transactions in
issue is not consistent. The 1980 corporate return reports an
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