Edward E. and Constance M. Thorpe - Page 14

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               ETCO did not provide sufficient substantiation to refute               
          respondent's determination of the automobile expenses as required           
          under section 274(d)(4).  Although ETCO offered a mileage log,              
          which showed destinations, dates, and miles driven, ETCO did not            
          offer records to substantiate which of the two automobiles had              
          been driven on each date, the total odometer mileage for each               
          automobile, return dates, or the business purpose of each trip              
          they took in each of the automobiles.  Added to the lack of                 
          substantiation to determine accurately the business-use                     
          percentage are the facts that the Lincoln was not designated as a           
          business-use automobile on the lease agreement and was designated           
          as a personal-use vehicle on the insurance contract.  We find               
          that ETCO has not carried its burden to show that deductions in             
          excess of that determined in respondent's notice of deficiency              
          should be allowed.4                                                         
               Respondent further argues that the amounts of the automobile           
          lease payments and the automobile insurance payments, paid by               
          ETCO and attributed to Mr. and Mrs. Thorpe's personal use, were             
          constructive dividends from ETCO to Mr. and Mrs. Thorpe.                    
          Generally, section 61 provides that gross income includes income            
          from whatever source derived, including fringe benefits, gross              

               4In the notice of deficiency sent to ETCO, respondent also             
          determined that ETCO's income must be increased by $713 in fiscal           
          year 1990 due to the auto lease inclusion requirements.  See sec.           
          280F.  Petitioners do not contest this amount, either at trial or           
          on their briefs.  Therefore, respondent's determination with                
          respect to this amount is sustained.                                        

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