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expenses that Dieter Electronics paid during 1992 as “parts” and
“cost of goods sold-contract labor” in its corporate return for
the taxable year ended January 31, 1993.
The accumulated earnings and profits of Dieter Electronics
for the years at issue were sufficient to cover the total divi-
dends, including constructive dividends, that Mr. Daimler and Ms.
Mondragon received during those years.
Dieter Electronics paid Mr. Daimler and Ms. Mondragon net
salary of $28,100, $28,160, and $31,399 for tax years 1990, 1991,
and 1992, respectively. Mr. Daimler and Ms. Mondragon reported
net wages (i.e., gross wages on line 10 of Forms W-2 less Federal
income tax and Social Security tax withheld) in the amounts of
$22,836, $22,840, and $28,639 in their joint returns for 1990,
1991, and 1992, respectively. As a result, petitioners failed to
report taxable wages that they received from the Company in the
amounts of $5,264, $5,320, and $2,760 for 1990, 1991, and 1992,
respectively, in their respective joint returns for those years.
On September 6, 1984, Mr. Daimler and Ms. Mondragon person-
ally purchased a building located at the corner of Kemp and
Avenue K in Wichita Falls, Texas (the Building), for $145,000,
$5,000 of which was allocated to land. The Building was used as
the principal place of business of Dieter Electronics. On
November 1, 1989, Mr. Daimler and Ms. Mondragon sold a portion
(i.e., 66 percent) of the Building (November 1, 1989 sale) to an
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