Donald C. Richardson and Rita M. Allaire - Page 16

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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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