- 9 - to make repayment and an intent on the part of the person advancing the funds to require repayment. See Fisher v. Commissioner, 54 T.C. 905, 909-910 (1970); Mercil v. Commissioner, 24 T.C. 1150 (1955). We look to both testimony and objective facts to ascertain intent. See Busch v. Commissioner, 728 F.2d 945, 948 (7th Cir. 1984), affg. T.C. Memo. 1983-98; Commissioner v. Makransky, 321 F.2d 598, 600 (3d Cir. 1963), affg. 36 T.C. 446 (1961). Testimony is not determinative, particularly where it is contradicted by the objective evidence. See Busch v. Commissioner, supra; Glimco v. Commissioner, 397 F.2d 537, 540-541 (7th Cir. 1968), affg. T.C. Memo. 1967-119. In the family context, a transfer of money may be a gift or a loan. See Hughes v. Commissioner, T.C. Memo. 1992-438. Furthermore, in the case of a bona fide loan, a gift may subsequently result should the loan be forgiven. See id. In the instant case, the $50,000 payment to petitioner came from the corporation and not directly from the Pattersons. Generally, a distribution by a corporation to a shareholder out of accumulated earnings and profits may constitute a dividend taxable to the shareholder as ordinary income. See secs. 301, 316; Commissioner v. Gordon, 391 U.S. 83, 88-89 (1968); Hardin v. United States, 461 F.2d 865, 872 (5th Cir. 1972). A formal dividend declaration is not required for a corporate distribution to constitute a dividend. See Sachs v. Commissioner, 277 F.2dPage: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 Next
Last modified: May 25, 2011