Midwest Stainless, Inc. and Robert A. and Mary J. Lechner - Page 3

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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,                               
                  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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