-44-
In determining whether constructive dividends have been
received, the key factors are whether the shareholders received
economic benefits from the corporation without expectation of
payment, and whether the company-provided benefits made available
to the shareholders were primarily of a personal nature rather
than in the business interests of the corporation. Ireland v.
United States, supra at 735; Loftin & Woodard, Inc. v. United
States, supra at 1215-1217.
It is undisputed that the distributions of property to
petitioner, and to Mrs. Jones through petitioner, provided
petitioners economic benefit and served no business purpose of
INI. Therefore, for petitioners to exclude the value of the
distributed property from their gross income they must prove that
INI expected payment for the property petitioners received.
Petitioner asserts that the property (including cash and
real property) he and Mrs. Jones received from INI was the
proceeds of loans, not dividends. As discussed above in Issue 1,
for petitioners to exclude the withdrawals from their income as
loans, they must prove that at the time of each withdrawal,
petitioner unconditionally intended to repay the amounts received
and INI unconditionally intended to require payment. Rule
142(a); Haag v. Commissioner, 88 T.C. at 615-616; Litton Bus.
Sys., Inc. v. Commissioner, 61 T.C. at 377; see also Haber v.
Commissioner, 52 T.C. at 266; Saigh v. Commissioner, 36 T.C. at
419.
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