- 17 -17
Generally, "a taxpayer need not treat as income moneys which
he did not receive under a claim of right, which were not his to
keep, and which he was required to transmit to someone else as a
mere conduit." Diamond v. Commissioner, 56 T.C. 530, 541 (1971),
affd. 492 F.2d 286 (7th Cir. 1974). No tax is imposed upon the
receipt of money in a fiduciary or agency capacity. Stone v.
Commissioner, 865 F.2d 342, 343 (D.C. Cir. 1989); Heminway v.
Commissioner, 44 T.C. 96, 101 (1965). However, where a
shareholder uses corporate property for his personal benefit, not
proximately related to corporate business, the shareholder must
include the value of the benefit in income as constructive
dividends to the extent of the corporation's earnings and
profits. DiZenzo v. Commissioner, 348 F.2d 122, 125 (2d Cir.
1965), revg. in part and remanding for additional findings to
support the Tax Court's holding, T.C. Memo. 1964-121, remanding
T.C. Memo. 1966-16; Truesdell v. Commissioner, 89 T.C. 1280, 1294
(1987); Falsetti v. Commissioner, 85 T.C. 332, 356 (1985).
Ferrentino argues that he used the check proceeds to pay for
"casual labor" needs of AJF during certain peak times or when
additional help was needed. Respondent counters that any
additional labor needs of AJF were satisfied by the use of leased
helpers from Manpower Services.
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