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they were made primarily for his or her benefit and if he or she
received a direct or tangible benefit therefrom. Gilbert v.
Commissioner, 74 T.C. 60, 64 (1980); Schwartz v. Commissioner,
69 T.C. 877, 884 (1978). The amount of the constructive dividend
reflects the benefit conferred on the shareholder. Nicholls,
North, Buse Co. v. Commissioner, 56 T.C. 1225, 1238 (1971).
The crucial test of the existence of a constructive dividend
is whether "the distribution was primarily for shareholder
benefit." Loftin & Woodard, Inc. v. United States, 577 F.2d
1206, 1215 (5th Cir. 1978); Sammons v. Commissioner, 472 F.2d
449, 452 (5th Cir 1972), affg. in part, revg. in part, and
remanding T.C. Memo. 1971-145; Truesdell v. Commissioner, 89 T.C.
1280, 1295 (1987); Magnon v. Commissioner, supra at 994. To make
this determination, we look at all the facts and circumstances
surrounding the expenditures, including the nature of the
building improvements and evidence that the shareholder benefited
from the corporate expenditures.
Based on the record at hand, we conclude that petitioners
received a direct economic benefit from GRC's construction
expenditures. First, as to the nature of the improvements, each
party presented an expert to opine on whether the Ashland
Building was constructed for use as a metals refinery. We were
unimpressed with both experts and do not accept either expert's
characterization of the nature of the improvements as
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