Midwest Stainless, Inc. and Robert A. and Mary J. Lechner - Page 20

                                               - 20 -                                                  

            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.                    

            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.                                              

Page:  Previous  1  2  3  4  5  6  7  8  9  10  11  12  13  14  15  16  17  18  19  20  

Last modified: May 25, 2011