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benefit on its shareholder, and whether the item primarily
benefits the shareholder's personal interests as opposed to the
business interests of the corporation. Ireland v. United States,
621 F.2d 731, 735 (5th Cir. 1980); Chapman v. Commissioner, T.C.
Memo. 1997-147; Gill v. Commissioner, supra.
We have held that substantial portions of the payments made
by Dolphin through Innovative to Mr. Ciaravella, which were
reported as gross receipts on the Innovative Schedules C, are
deductible as advertising expenses of Dolphin. To the extent
that such expenses are deductible by Icarus on the consolidated
returns, they do not constitute constructive dividends to Mr.
Ciaravella, inasmuch as such amounts primarily benefit the
business interests of Dolphin.
The remaining portions of the Innovative gross receipts
consist of: (1) The race car expenses paid by Dolphin that are
disallowed as deductions on the Icarus consolidated returns;
(2) the portion of payments made by Dolphin that were eventually
paid to trade publications and magazines in which Dolphin
advertised; and (3) payments by third parties for the sale of
race car parts and rental of the race car and race car equipment.
We hold that these remaining portions of the gross
receipts likewise do not constitute constructive dividends to
Mr. Ciaravella. The portion of the race car expenses that was
disallowed as a deduction to Icarus, even though it does not
represent amounts expended for the business interests of Dolphin,
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