Richard J. and Carol C. Spera - Page 14

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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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