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to the condominium. Petitioners have failed to prove that such
amount was disbursed at the direction of Diapazon.
Except with respect to the transfer, respondent’s
determination of a deficiency is sustained to the extent it
relates to respondent’s disallowances of purchases.
IV. Constructive Dividends
During 1991 and 1992, Markovski received seven deposits into
his bank accounts by wire transfer from abroad (the Markovski
deposits). Six of those deposits were made in 1991 and totaled
$746,340. The seventh deposit was made in 1992 in the amount of
$1,600,000. Respondent treated the Markovski deposits as if they
had been received by (and belonged to) American Valmar and had
then been distributed to Markovski with respect to his stock.
Respondent made positive adjustments to American Valmar’s income
on the basis that the Markovski deposits were items of gross
income to American Valmar.2 Respondent made positive adjustments
in Markovski’s income on the basis that the Markovski deposits
constituted constructive dividends from American Valmar.3
2 In his notices of deficiency to American Valmar, respondent
labels the adjustments to American Valmar’s income “Receipts From
Shareholder Account”. The adjustments are $613,410 and
$1,600,000 for American Valmar’s taxable years ending June 30,
1991, and 1992. Inexplicably, respondent has omitted making an
adjustment to American Valmar’s 1992 income for the Markovski
deposits in the amounts of $52,730 and $80,200 received by
Markovski on July 1 and 12, 1991, respectively.
3 The adjustment for 1991 totaled $803,477, which is $57,137
greater than the Markovski deposits received during 1991.
(continued...)
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