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We conclude that AIM may not deduct its reimbursements to
petitioner for golf expenses he paid in 1995 and 1996.
Petitioners contend that AIM’s reimbursements to petitioner
for golf expenses are not constructive dividends to petitioner.
We disagree. A shareholder receives a constructive dividend to
the extent of the corporation’s earnings and profits if the
corporation pays a personal expense of its shareholder or the
shareholder uses corporate property for a personal purpose.
Secs. 301, 316; Falsetti v. Commissioner, 85 T.C. 332, 356-357
(1985); Henry Schwartz Corp. v. Commissioner, 60 T.C. 728, 743-
744 (1973). Petitioners did not show that petitioner’s golf
expenses were not primarily personal. Thus, AIM’s golf
reimbursements to petitioner are constructive dividends.
Petitioner testified that he played golf only with clients and
that he was reimbursed by AIM for only one-half of the golf
expenses. However, petitioners have not shown that the amounts
petitioner was reimbursed were for clients’ golf expenses.6
6 Petitioners bear the burden of proving that AIM had
insufficient earnings and profits to support the constructive
dividend treatment. United States v. Bok, 156 F.3d 157, 163 (2d
Cir. 1998); Pittman v. Commissioner, 100 F.3d 1308, 1318 (7th
Cir. 1996), affg. T.C. Memo. 1995-243; Hagaman v. Commissioner,
958 F.2d 684, 695 n.16 (6th Cir. 1992), affg. and remanding T.C.
Memo. 1987-549. Petitioners did not contend and did not offer
any evidence showing that AIM had insufficient earnings and
profits to support constructive dividend treatment.
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