Midwest Stainless, Inc. and Robert A. and Mary J. Lechner - Page 16

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                  With respect to the likelihood of repayment, petitioners’                            
            argument seems to be that the accounting entry reducing the                                
            receivable is equivocal, and that it doesn’t have the effect of a                          
            payment or distribution because it might be reversed.  Mr. Noble                           
            testified that if respondent’s dividend determination is not                               
            sustained by the Court, that is, if petitioner wins his case, the                          
            receivables ledger of Stainless will be adjusted to add back the                           
            amount by which the Receivable from Officer account was reduced                            
            to reflect Mr. Lechner’s payment of his defense fees, which--Mr.                           
            Noble originally advised--should be treated as corporate                                   
                  Petitioners’ argument that a constructive dividend                                   
            distribution requires corporate payment or outlay of funds also                            
            has no merit.  It ignores the circumstances in which the original                          
            debt was created.  When Mr. Lechner deposited in his personal                              
            bank account receipts that-–the parties agree--belonged to the                             
            corporation, he received payments of corporate funds that would                            
            have been includable in his gross income (or at least treated as                           
            corporate distributions to him at that earlier time) but for Mr.                           
            Noble’s corporate journal entry creating the receivable that                               
            treated the receipts as giving rise to what--the parties also                              
            agree-–thereby became valid debt.  Because the original payment                            
            to Mr. Lechner was offset by the debt, there was no increase in                            
            his net worth and no distribution supporting a dividend to him at                          

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