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9, 1997, respondent issued a notice of deficiency to the
Robinsons for their 1992 and 1993 individual income tax years.
In that notice, respondent determined that the Robinsons had
constructive dividend income of $115,888 and $216,685 that was
attributable to Career’s fiscal years ended July 31, 1992 and
1993. The constructive dividends were imputed to Mr. Robinson,
as 100-percent owner of Career, and derived from various
nonbusiness expenses of the Robinsons that were paid by the
corporation.4 Payment of these personal items of the Robinsons
was not reported as income by them or as loans to shareholders on
Career’s books.
Respondent also determined that the Robinsons were liable
for self-employment tax in the amounts of $5,928 and $4,383 for
1992 and 1993, respectively. Those adjustments were based on
respondent’s determination that Mr. Robinson received corporate
compensation during 1992 and 1993 ($31,015 in each year) which
had not been reported as self-employment income. The Robinsons
did report the $31,015 on each of their 1992 and 1993 returns,
but reported the amount as income from “forgiveness of debt”.
Career’s books and records do not reflect any specific
4 With the exception of the $39,824 constructive dividend
remaining in controversy (which involves payments of the
Robinsons’ expenses during the first half of Career’s fiscal year
ended July 31, 1992) the parties have reached agreement regarding
the remainder of the Robinsons’ constructive dividend issues for
1992 and 1993.
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