Jerry L. Crabtree - Page 28




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             its shareholders.  The notice of deficiency issued to                    
             petitioner Jerry Crabtree contains the following                         
             explanation:                                                             

                  It is determined that, for the years ended                          
                  December 31, 1992, 1993, and 1994, you received                     
                  dividends from the corporation, Crabtree Invest-                    
                  ments, in the amount of $320,847, $162,737, and                     
                  $210,946, respectively.                                             
                  Accordingly, your taxable income for the years                      
                  ended December 31, 1992, 1993, and 1994, is                         
                  increased in the amounts of $320,847, $162,737,                     
                  and $210,946, respectively.                                         

             The notice of deficiency issued to petitioner Eddie                      
             Crabtree contains a similar explanation.  Petitioners bear               
             the burden of proving respondent’s determination wrong.                  
             See id.                                                                  
                  Section 61(a) defines gross income as “all income                   
             from whatever source derived,” including gross income                    
             derived from dividends.  See sec. 61(a)(7).  Dividends may               
             be formally declared or they may be constructive.  See                   
             Noble v. Commissioner, 368 F.2d 439, 442 (9th Cir. 1966),                
             affg. T.C. Memo. 1965-84; Commissioner v. Makransky, 321                 
             F.2d 598, 601 (3d Cir. 1963), affg. 36 T.C. 446 (1961);                  
             Sachs v. Commissioner, 277 F.2d 879, 882 (8th Cir. 1960),                
             affg. 32 T.C. 815 (1959).  The determination of whether a                
             constructive dividend was received is a question that                    






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