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Spera v. Commissioner, T.C. Memo. 1998-225. Holland America’s
payment of the miscellaneous expenses resulted in a constructive
dividend to Mr. and Mrs. Dobbe as determined by respondent. See
secs. 61(a)(7), 316.
D. The Shareholder Loan Account
Mr. and Mrs. Dobbe argue that, even if we hold that payment
of the expenses in question benefited them financially, the
payments should be treated as corporate repayments of their
shareholder loans. Petitioners rely on Creske v. Commissioner,
T.C. Memo. 1988-574, to support their position that prior loans
from a shareholder to a corporation are sufficient consideration
to avoid the imposition of a constructive dividend. We disagree.
In Creske, Wausau Tile, Inc. (Wausau), paid bonuses to its
shareholders and employees in the form of promissory notes, which
were credited to note payable accounts. The bonuses were
properly declared as income in each year and Federal and State
income taxes were withheld. In order to obtain industry
discounts, Wausau expressly authorized and approved payment of
the costs of building a new home for one of its officers and
directors, William J. Creske, as a way of repaying the promissory
notes payable to him. Thus, Wausau paid the expenses incurred
during 1983 and 1984 that related to the purchase of the lot of
land and various subsequent construction costs of Mr. Creske’s
personal residence. Over the course of 2 years, Wausau issued
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