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constructive dividend income to shareholder). Petitioners have
introduced no evidence that these transfers benefited CFC and do
not contend that the transfers were made for any reason other
than personal reasons. Therefore, because petitioners failed to
show Mr. Cordes received no personal benefit or satisfaction from
these transfers, we hold Mr. Cordes received constructive
dividends in 1992 and 1993 with respect to these items in the
amounts determined by respondent.
2. Diversion of Corporate Income33 and Loan Interest
Allocation
In 1992 and 1993, Mr. Cordes diverted CFC income--amounts
collected on debts CFC had previously reported as bad debts--to
the Cordeses’ benefit. Income diverted from a corporation for a
shareholder’s benefit may be a constructive dividend to that
shareholder. Truesdell v. Commissioner, 89 T.C. 1280, 1295
(1987); Fed. Auto Body Works, Inc. v. Commissioner, T.C. Memo.
1990-303. Petitioners have not introduced any evidence that CFC
recognized any benefit from these transfers. We hold Mr. Cordes
received constructive dividends with respect to these items in
the amounts determined by respondent.
Likewise, with regard to the excess interest paid in 1992
and 1993 by CFC to Mr. Cordes, discussed supra, petitioners
33See supra note 10. Petitioners did not present arguments
regarding the diversion of corporate income in 1992 and 1993. We
nevertheless choose to address it briefly here.
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