T.C. Memo. 1998-225
UNITED STATES TAX COURT
RICHARD J. AND CAROL C. SPERA, Petitioners v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 130-97. Filed June 25, 1998.
C, the wholly owned corporation of H, constructed
a building on land owned by H and W (Ps). R determined
and argues that the expenditures for this building are
constructive dividends to Ps. Ps argue that the land
was leased to C and that the expenditures were not
constructive dividends to them.
Held: Because the expenditures were made with the
primary intention and result of conferring a benefit on
Ps, C's expenditures are constructive dividends to Ps
to the extent of C's earnings and profits.
Held, further, Ps are liable for the accuracy-
related penalties determined by R under sec. 6662(a),
I.R.C., to the extent described herein.
James J. Mahon, for petitioners.
Monica E. Koch and Andrew Mandell, for respondent.
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