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Robert Hinman, C.P.A., of Stanfield & O’Dell, P.C., prepared
CFC’s, ECI’s, the Cordeses’, John Cordes’s, and Eddy Ben Cordes’s
tax returns for the years at issue. Michael Mayhall of Godlove,
Mayhall, et al., Attorneys, prepared Jean Ann Richard’s tax
returns for the years at issue.
II. Constructive Dividends
Respondent determined that one or more of the individual
petitioners received constructive dividends in the years at issue
from CFC and/or ECI. Specifically, respondent determined that
the individual petitioners in each docket4 received the following
constructive dividends from the following corporations:
Source of Distribution
ECI 1994 1995
Diversion of checks from
unidentified loans $88,225 $16,000
Diversion of tag refunds 57,609 55,088
Excess payoffs 3,826 28,514
Cash distributions to Mr. Cordes -0- 600,000
Total from ECI 149,660 699,602
4Respondent claims that the constructive dividends arose
from certain transactions between CFC and/or ECI and the members
of the Cordes family, wherein the shareholder(s) received
economic benefit(s) from the corporation or corporations, without
an expectation of repayment. Because respondent was initially
unable to determine which individual petitioner received each
constructive dividend, respondent determined, to protect the
Government’s interest, that each of the individual petitioners
received the constructive dividend in full.
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