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that respondent’s bank deposits analysis is erroneous. See Parks
v. Commissioner, 94 T.C. 654, 658 (1990). Petitioners, however,
failed to present any credible evidence establishing that
respondent’s computation of unreported income is incorrect. See
Welch v. Helvering, 290 U.S. 111, 115 (1933). Therefore, we
sustain respondent’s determination of the amount of unreported
income for both the Zamzams and ZMDI.
II. Constructive Dividends
Respondent determined that the corporate receipts diverted
to the Zamzams’ personal use were constructive dividends from
ZMDI. A shareholder receives a constructive dividend when
payment from a corporation to or for the benefit of such
shareholder confers an economic benefit on the shareholder. See
Nobel v. Commissioner, 368 F.2d 439, 442-443 (9th Cir. 1966);
Truesdell v. Commissioner, 89 T.C. 1280, 1292 (1987).
Petitioners contend that the diverted funds were
compensation to Dr. Zamzam and deductible by ZMDI pursuant to
section 162(a)(1). Payments are deductible, however, only when
they are intended as compensation. See King’s Court Mobile Home
Park, Inc. v. Commissioner, 98 T.C. 511, 514 (1992). The
testimony and documentary evidence establish that ZMDI did not
intend that these payments be compensation and that the Zamzams
received an economic benefit from the funds they diverted from
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