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near the outdoor pool and is connected to the old solarium, which
was used solely for personal reasons. Mr. and Mrs. Dobbe have
failed to prove that they did not receive an economic benefit
from the construction of the new solarium or that its primary use
was for business purposes. The cost of the new solarium and the
landscaping must be included in Mr. and Mrs. Dobbe’s income as a
dividend. See secs. 61(a)(7), 316.
B. The Grocery Expense Reimbursement
The grocery expense reimbursement also represented economic
gain to Mr. and Mrs. Dobbe. Since Mr. and Mrs. Dobbe are not
entitled to exclude the reimbursement for groceries from their
income under section 119, they must include the entire
reimbursement in their income as a dividend. See secs. 61(a)(7),
316.
C. Miscellaneous Expenses
Holland America’s payment of the miscellaneous expenses
attributable to Mr. and Mrs. Dobbe’s residence also directly
benefited Mr. and Mrs. Dobbe. Utilities, insurance, and property
taxes for a taxpayer’s personal residence are inherently personal
expenses, are not normally subsidized by a corporation, and are
usually drawn from a taxpayer’s personal funds. Payment of a
shareholder’s personal expenses by a corporation provides an
economic benefit to the shareholder and is taxable as a
constructive dividend to the extent of earnings and profits. See
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