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In the circumstances of this case, we are loath to impute such an
agreement. We also doubt that such an agreement, even if it
occurred and was formally binding, would change the result
generated by giving effect at face value to the corporate book
entry reducing the receivable. Cf. Harwood v. Commissioner, 82
T.C. 239 (1984).
We conclude that 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, which was
evidenced by the journal entry reducing the Receivable from
Officer account in the books and records of Stainless.
To reflect the foregoing and the concessions of the parties,
Decision will be
entered under Rule 155.
8(...continued)
deduction, will a repayment by the employee of an amount
disallowed as a corporate deduction, be allowed as a deduction of
the amount previously included in his gross income. See Pahl v.
Commissioner, 67 T.C. 286 (1976); Oswald v. Commissioner, 49 T.C.
645 (1968); Rev. Rul. 69-115, 1969-1 C.B. 50.
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