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returns. The sole issue remaining for decision is whether Mr.
Lechner’s debt to Stainless was actually reduced so as to be
included in his gross income as a constructive dividend. We hold
that Mr. Lechner’s debt to Stainless was reduced in such
circumstances as to require the reduction to be so included.
FINDINGS OF FACT
Some of the facts have been stipulated and are so found.
The stipulations of fact and accompanying exhibits are
incorporated herein by this reference. The Lechners are husband
and wife. At the time the petition was filed, the Lechners
resided and Stainless had its principal office at Menomonie,
Wisconsin.
Mr. Lechner owned and operated a stainless steel fabricating
business known as Midwest Stainless Mechanical Contractors as a
sole proprietorship (the sole proprietorship) for 8 or more
years, ending on May 31, 1993.
Stainless was incorporated on June 1, 1993, in a section
3511 exchange of the assets of the sole proprietorship for stock
of Stainless. At all times thereafter, Mr. Lechner has been the
sole shareholder of Stainless.
1 Unless otherwise indicated, all section references are to
the Internal Revenue Code in effect for 1993-1995, and all Rule
References are to the Tax Court Rules of Practice and Procedure.
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