Midwest Stainless, Inc. and Robert A. and Mary J. Lechner - Page 19

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                  In further response to petitioners’ argument based on Mr.                            
            Noble’s testimony, we would observe that our acceptance of this                            
            argument would compromise the integrity of corporate books and                             
            records as evidence of corporate action by encouraging “wait and                           
            see” game playing.  Notwithstanding that all corporate action                              
            taken in this case was at the direction and advice of Mr. Noble,                           
            we have only his after-the-fact testimony about the corporate                              
            action that will be taken in response to a decision of the Court                           
            that treats the reduction of the liability as a nullity.  There                            
            was no preexisting binding agreement between Mr. Lechner and                               
            Stainless regarding the circumstances, if any, in which the                                
            reduction of the debt on the corporate books would be reversed.8                           

            reduction created no constructive dividend to Mr. Lechner, he and                          
            Stainless would be content to leave well enough alone by not                               
            undoing the reduction of the receivable.  The offer implies that                           
            the reduction did increase Mr. Lechner’s net worth and that a                              
            retroactive restoration of the receivable would be necessary to                            
            prevent the increase from having occurred.  If the issue before                            
            the Court had not been raised by respondent’s deficiency notice                            
            to Mr. Lechner, there is no reason to believe that Mr. Lechner                             
            would have voluntarily caused Stainless to restore the                                     
            receivable.  Nor is there any procedure that we know of (or would                          
            be interested in exploring) under which a decision in Mr.                                  
            Lechner’s favor could be conditioned on the restoration of the                             
            receivable.  In these circumstances, we accept and take at face                            
            value the stipulation of the parties that the receivable was                               
            reduced in an amount equal to the legal defense fees paid by                               
            Mr. Lechner.                                                                               
            8 Only if the shareholder-employee enters into a binding                                   
            repayment agreement with his corporation, prior to the time of                             
            its payment to the employee for which the corporation claims a                             

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