- 29 -
not control CFC, control or participate in the transfers at
issue, or in some cases know of the transfers at issue, and (2)
because the transfers did not cause an accession to her wealth.
The law in this area is well settled. Section 301(a) and
(c)(1) requires the inclusion in a shareholder’s gross income of
amounts received as dividends. Secs. 61(a)(7), 301(c)(1),
316(a); Hillsboro Natl. Bank v. Commissioner, 460 U.S. 370, 392
(1983); see Ireland v. United States, 621 F.2d 731, 735 (5th Cir.
1980); see also Old Colony Trust Co. v. Commissioner, 279 U.S.
716, 729-731 (1929). Section 316(a) defines a dividend as “any
distribution of property made by a corporation to its
shareholders--(1) out of its earnings and profits accumulated
after February 28, 1913, or (2) out of its earnings and profits
of the taxable year”.31 It is not necessary that the corporation
intend a dividend, or that the distribution be termed a dividend
or be recorded as such. Dolese v. United States, 605 F.2d 1146,
1152 (10th Cir. 1979). Thus, dividends may be either formally
declared or they may be “constructive”. Ireland v. United
States, supra at 735.
31Petitioners have failed to meet their burden of proving
that there were not sufficient accumulated or current earnings
and profits to support the deficiencies determined in
respondent’s notices of deficiency. Rule 142(a). But see
Appendix B, Summary of Conceded, Deemed Conceded, Computational,
and Settled Issues.
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