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$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...)
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