Loretta Jean Randolph - Page 10




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          879, 882 (8th Cir. 1960), affg. 32 T.C. 815 (1959); Paramount-              
          Richards Theatres, Inc. v. Commissioner, 153 F.2d 602, 604 (5th             
          Cir. 1946), affg. a Memorandum Opinion of this Court; Yelencsics            
          v. Commissioner, 74 T.C. 1513, 1529 (1980).  All of the facts               
          surrounding a transaction must be considered to determine whether           
          a payment by a corporation to a taxpayer constitutes a dividend             
          or something else; e.g., a loan, a gift, or compensation for                
          services.  See John Kelley Co. v. Commissioner, 326 U.S. 521, 526           
          (1946); Hardin v. United States, supra; see also Milenbach v.               
          Commissioner, 106 T.C. at 195.  A corporation’s cancellation of a           
          shareholder’s indebtedness may constitute a constructive dividend           
          or compensation for services.  See Shephard v. Commissioner, 340            
          F.2d 27, 29-30 (6th Cir. 1965), affg. per curiam T.C. Memo. 1963-           
          294; see also Estate of Shapiro v. Commissioner, T.C. Memo. 1987-           
          126.                                                                        
               Petitioner introduced no evidence directed toward                      
          establishing the corporation’s intent in paying her $50,000                 
          during 1989.7  The Pattersons controlled the corporation, and               
          they played an integral part in the decision for the corporation            


               7This Court does not consider statements in a brief as                 
          proof.  See Rule 143(b); Niedringhaus v. Commissioner, 99 T.C.              
          202, 214 n.7 (1992); Viehweg v. Commissioner, 90 T.C. 1248, 1255            
          (1988).  Although petitioner indicated that she wished to testify           
          at trial, she declined to swear under oath or affirm or otherwise           
          verify that her testimony would be true and made under penalty of           
          perjury.  Accordingly, we could not permit her to testify.  See             
          Fed. R. Evid. 603; DiCarlo v. Commissioner, T.C. Memo. 1992-280;            
          cf. United States v. Ward, 989 F.2d 1015 (9th Cir. 1992).                   





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