- 14 -
Expenditure 1989 1990 1991
Medical insurance premiums1 $6,184 $6,910 -0-
Medical expenses -0- 3,121 -0-
Life insurance premiums 530 540 -0-
American Express charges2 148,760 168,854 $36,986
Martin’s Restaurant3 3,849 5,639 1,111
1Eddie Cordes, Inc., paid the medical insurance premiums in
1989 and 1990. CFC fully reimbursed Eddie Cordes, Inc., in 1992
for those expenses with funds charged to account No. 312. The
parties tried by consent, and we consider, whether those expenses
constitute constructive dividends in 1989 and 1990 as if CFC
originally incurred those expenses. See Cordes v. Commissioner,
T.C. Memo. 1994-377.
Respondent determined Mrs. Cordes was responsible for tax on
$3,955 and $4,459, respectively. The parties, however, have
stipulated that the medical insurance premiums were $6,184 and
$6,910 in 1989 and 1990, respectively.
2Respondent determined Mrs. Cordes was responsible for tax
on $148,757 for 1989, and $169,465 for 1990. The parties,
however, have stipulated that CFC paid $148,760 and $168,854 of
the Cordeses’ American Express charges in 1989 and 1990,
respectively. We treat the parties’ stipulation as to 1990 as a
concession on respondent’s part, to the extent of $611.
3Respondent determined Mrs. Cordes was responsible for tax
on $3,682 for 1989. The parties have stipulated, however, that
CFC paid $3,849 of the Cordeses’ Martin’s Restaurant charges in
1989.
D. Diversion of Corporate Income
Mr. Cordes also diverted from CFC, for his and Mrs. Cordes’s
personal use, $57,732, $69,251, and $26,240 in 1991, 1992, and
1993, respectively. These amounts represented collections on
debts CFC had previously reported as bad debts.10
E. Purchases of Corporate Notes at Bargain Prices
In 1986, Jaime D. Patton (the Cordeses’ niece) and Robert A.
10The Cordeses do not dispute respondent’s determinations
regarding 1992 and 1993. We therefore treat the Cordeses as
conceding those specific determinations. See Appendix B, Summary
of Conceded, Deemed Conceded, Computational, and Settled Issues.
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