Milo G. and Sarah E. Chapman, et al. - Page 27

                                                - 27 -                                                   
            benefit upon him.  Loftin & Woodard, Inc. v. United States, supra                            
            at 1214; Noble v. Commissioner, supra at 443.                                                
                  To the extent that Dura-Craft and Springbrook made payments                            
            to the Plan in excess of the amounts actually owed on the                                    
            corporate loans, the corporations conferred an economic benefit.                             
            While Dura-Craft and Springbrook may have mistakenly paid too                                
            much principal and interest, those payments, nonetheless,                                    
            satisfied the plan loans, which were the Chapmans' and the                                   
            Christies' personal debts due to the Plan.  As such, they                                    
            provided a taxable benefit to the individual petitioners.  We are                            
            satisfied that Milo Chapman and David Christie each received                                 
            dividend income during 1989 in the amount of $4,250.12                                       
            I.    Issue 5.  Processing Fee                                                               
                  Finally, we must consider whether the 5-percent processing                             
            fees paid to Northwest and included as a part of Dura-Craft's                                
            cost of goods sold are allowable.  Section 61(a) includes "gross                             
            income derived from business" in its general definition of gross                             
            income.  Sec. 61(a)(2).  Gross income from business means total                              
            sales, less cost of goods sold, plus any income from investments                             
            and from incidental or outside operations or sources.  Sec.                                  
            1.61-3(a), Income Tax Regs.                                                                  

                  12We express no opinion here as to any liability with                                  
            respect to the excise tax of sec. 4975 with regard to the plan                               

Page:  Previous  13  14  15  16  17  18  19  20  21  22  23  24  25  26  27  28  29  30  31  32  Next

Last modified: May 25, 2011