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to petitioner’s self-serving testimony, convinces us that the
payments INI made to Burke’s estate were in satisfaction of
petitioner’s contractual obligation to purchase Burke’s shares in
INI from the estate. The buy-sell agreement provides, in clear
and unambiguous language, that petitioner was obligated to
purchase Burke's shares from his estate for $150,000. Moreover,
petitioner and Thorpe agreed shortly after Burke's death that
petitioner was bound by the buy-sell agreement. The payments are
therefore not deductible as a business expense to INI. The
payments conferred a benefit on petitioner to the extent that he
was relieved of the obligation to pay for Burke’s shares with his
personal funds. Thus, the payments give rise to a constructive
dividend to petitioner. INI’s earnings and profits are
sufficient to render the payments fully taxable as a dividend.
Petitioner may well have had grounds for rescission or
reformation of the buy-sell agreement by reason of Burke’s
nondisclosure of his adverse medical history, which led to Mutual
Life’s refusal to honor the life insurance policy on Burke’s
life. However, petitioner never sought relief from his
obligation in any court, nor did he ever take the position that
he was not bound by the terms of the buy-sell agreement, as
amended. Burke’s estate may have had grounds for a quantum
meruit claim for a portion of the $100,000 bonus that was
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