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income for each year at issue by $24,000. Respondent made those
determinations because respondent determined that Mr. Whitehead
received from Burien Nissan constructive dividends of $24,000
during each such year. With respect to those determinations,
respondent contends that under cases such as Yelencsics v.
Commissioner, 74 T.C. 1513 (1980), Burien Nissan’s $2,000 monthly
payments to Mr. Stanford during the years at issue constitute
constructive dividends to Mr. Whitehead for those years. That is
because, according to respondent, by making those payments Burien
Nissan relieved Mr. Whitehead of his obligations under the
promissory note that he issued to Mr. Stanford on September 13,
1991. Petitioners contend that the September 13, 1991 Whitehead/
Stanford stock purchase agreement pursuant to which Mr. Whitehead
purchased Mr. Stanford’s Burien Nissan stock was void or voidable
because of the restrictions placed on the transfer of such stock
pursuant to the September 1, 1990 stockholders’ agreement.
Consequently, according to petitioners, Mr. Whitehead did not
purchase Mr. Stanford’s Burien Nissan stock, and Burien Nissan’s
payments to Mr. Stanford during the years at issue represented
payments to Mr. Stanford in redemption of his Burien Nissan
stock.
Both the May 25, 1990 stock purchase agreement25 and the
25Although petitioners do not rely on the May 25, 1990 stock
purchase agreement, that agreement required the prior written
(continued...)
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