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B. Constructive Dividends
The parties dispute whether the following items are
constructive dividends to Mr. and Mrs. Reaves: (1) The 282
checks written on the Reaves Livestock account and payable to
fictitious persons; (2) two Circle S checks payable to Marlboro
Farms; (3) Lumberton Auction checks payable to Reaves Livestock,
S&J, Slick Prevatte, and Mike Reaves; (4) seven checks written on
the Reaves Livestock account payable to S&J and cashed by Lawson;
(5) a $4,750 check written on the S&J account dated December 16,
1985, payable to Mrs. Reaves; (6) an $11,730 check written on the
George K. Reaves account dated December 26, 1986, payable to
Allstate Truck & Equip., Inc.; (7) a $23,800 check written on the
George K. Reaves account dated December 28, 1987, payable to
Crook Motor Co., Inc.; (8) a $19,151 check written on the S&J
account dated March 23, 1987, payable to First Citizens Bank for
a cashier's check; and (9) seven Reaves Livestock checks payable
to S&J.4
4 Mr. and Mrs. Reaves concede that they received
constructive dividends from checks written on the First Citizens
accounts and the John Chavis checks in the following amounts:
$13,814 in 1984, $19,551 in 1985, $89,150 in 1986, $68,556 in
1987, and $58,646 in 1988.
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