Midwest Stainless, Inc. and Robert A. and Mary J. Lechner - Page 15

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            under review occurred; i.e., at the time of the entry on the                               
            corporate books reducing the debt.                                                         
                  Petitioners make two arguments.  With respect to economic                            
            benefit, they argue that treating the accounting entry reducing                            
            Mr. Lechner’s debt to Stainless as a constructive dividend would                           
            give dispositive effect to “bookkeeping subtleties”, of the sort                           
            we deemed “irrelevant” in Halpern v. Commissioner, supra.6                                 
            Petitioners assert the need to show an actual corporate payment                            
            or other outlay to justify a finding that Mr. Lechner received a                           
            constructive dividend distribution.                                                        

            6 We observe that the Court in Halpern v. Commissioner, T.C.                               
            Memo. 1982-31, made the comment about “accounting subtleties” in                           
            rejecting an individual shareholder’s argument that corporate                              
            bookkeeping entries treating as loans advances to him for travel                           
            and entertainment expenses that he never substantiated or repaid                           
            should not be treated as dividends to him:                                                 
                  Halpern contends that the corporation’s method of                                    
                  recording its expenses should not cause the                                          
                  corporation’s payment of a legitimate business expense                               
                  to result in a constructive dividend to petitioner.  We                              
                  feel, however, that such bookkeeping subtleties are                                  
                  irrelevant.  The question is whether Halpern used the                                
                  amount advanced for his personal benefit or for the                                  
                  benefit of the corporation.                                                          
            *       *        *        *        *        *       *                                      
                  Without evidence that these expenses were for the                                    
                  benefit of his corporation, we hold that its payment of                              
                  these expenses resulted in Halpern’s receiving                                       
                  constructive dividends in the amount of $6,706.06.                                   
                  [Halpern v. Commissioner, T.C. Memo. 1982-31, 43 T.C.M.                              
                  (CCH) 346, 352, 1982 T.C.M. (RIA) par. 82,031, at 104-                               

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