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corporation primarily benefited from the payment of the
shareholder’s expenses. We do not believe petitioners have shown
that HIF primarily benefited from the payment of Mr. Hood’s legal
expenses. In these cases, there is no evidence that, in deciding
to pay the legal fees, genuine consideration was given to the
corporate interests identified by petitioners; namely, loss of an
indispensable employee if his legal expenses were not paid. To
the contrary, it does not appear that HIF’s failure to pay the
legal fees would have caused it to go out of business. Mr. Hood
in fact paid the deficiencies and civil fraud additions to tax
arising from the years for which he was indicted as well as 1985,
strongly suggesting that he had the wherewithal to pay the legal
fees associated with his criminal defense. Certainly there was
no showing that he could not. The evidence does not show that
HIF would have ceased operations if it did not pay the legal
fees, casting doubt on the claim that the primary purpose of the
expenditure was to forestall this result. The benefits to Mr.
Hood are obvious: free legal representation for which he would
otherwise have to pay to avoid incarceration and/or a felony
conviction. In these circumstances, “the business justifications
put forward are not of sufficient substance to disturb a
conclusion that the distribution was primarily for shareholder
benefit”. Sammons v. Commissioner, supra at 452. On these
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