- 7 - $26,702.80 personally paid by Mr. Lechner for defense fees in calendar year 1993 and $107,405.74 so paid in calendar year 1994. In the notice of deficiency issued to the Lechners for 1994, respondent added $113,495.00 to Mr. Lechner’s individual dividend income. This amount reflects the $107,405.74 reduction during 1994 of Mr. Lechner’s debt to Stainless referred to above, and $6,089.19 for other personal accounting and legal fees of Mr. Lechner actually paid by Stainless in 1994. The parties agree that the $6,089.19 referred to above is a constructive dividend that should have been reported on the Lechners’ 1994 joint individual tax return. ULTIMATE FINDING OF FACT In 1994 Mr. Lechner received an additional $107,405.74 in gross income from Stainless as a constructive dividend that took the form of a debt reduction. OPINION The apparent clarity and simplicity of the findings set forth above is belied by some missing links and skewed by one of respondent’s concessions, which might be considered overly generous (although not the one respondent has in mind).2 2 The concession of respondent that respondent asserts on brief might have been overly generous is respondent’s concession that Mr. Lechner is entitled to a Schedule C deduction for his payment of the defense fees in his criminal case. The concession (continued...)Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Next
Last modified: May 25, 2011