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the sales made payable to himself, used the funds for personal
expenses, and did not report the proceeds as income. Respondent
obtained from third-party sources copies of eight canceled checks
for 1993 listing petitioner as the payee for sales of equipment.
These canceled checks totaled $14,443.
(2). Constructive Dividend: Improvements to
Petitioners' Home
Respondent received invoices and other documentation from
contractors who performed work on petitioners' home. The
invoices were made out to and paid by PCCL in the amount of
$8,549. Petitioner Allaire signed the checks as an agent of PCCL
in payment of the invoices. Respondent also received information
from third-party sources that petitioners were aware of the
payment arrangements.
(3). Constructive Dividend: Petitioners'
Personal Expenses Charged to PCCL's
American Express Account
Respondent's revenue agent had reviewed PCCL's American
Express statements. The revenue agent concluded that $24,094
contained in these statements was attributable to personal
expenses of petitioners.
B. Adjustments to PCCL's 1993 Tax Return
The statutory notice of deficiency issued to PCCL included
adjustments in the total amount of $316,176.9 Based on the
9 Less the $13,770 upward adjustment to "Cost of Goods
Sold" due to an error on the return.
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