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In light of petitioners’ control of WVI, such expenses become
especially suspect. We conclude that the primary purpose of these
trips was petitioners’ personal enjoyment.
Petitioners’ visits were, at best, of marginal benefit to WVI
and the joint venture. As we have previously stated:
a trip that is primarily for the taxpayer’s
individual pleasure is not converted into a
business trip merely because some short
portions of the trip involve business
activities, even when it is clear that the
asserted business activities actually occurred
and that those business activities actually
affected the cost of the trip.
Grossman v. Commissioner, supra (citing George R. Holswade, M.D.,
P.C. v. Commissioner, 82 T.C. 686 (1984)).
In Grossman, a case whose facts are similar to those in this
case, we found that corporate expenses for trips taken by the
taxpayer and his wife that had a slight business component
constituted constructive dividends. In Grossman, the taxpayer and
his wife, the two principal owners in a closely held corporation,
took multiple trips to resort locations across North America,
ostensibly to conduct discussions regarding corporate business.
The taxpayers subsequently caused their corporation to reimburse
them for their expenses. Relying solely upon the taxpayer’s
assurances that there were no personal expenses involved, the
corporation’s accountant claimed deductions for travel and
entertainment expenses. In finding that the corporation made
constructive dividends to the taxpayer, we disagreed with the
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