Eddie Cordes, Inc., et al. - Page 7




                                        - 7 -                                         
                         CFC                      1994            1995                
          Cash distributions to John Cordes5      $800,000       -0-                  
          Cash distributions to Jean Ann Richard   800,000     $120,000               
          Cash distributions to Mrs. Cordes         484,651      400,000              
          Sale of 1994 and 1995 notes        1,733,608    1,073,608                   
          Diversion of checks from bad debts6     12,282         -0-                  
          Diversion of unbooked CFC income        71,910         -0-                  
          Unexplained source of funds               405,724      211,612              
          Total from CFC                        4,308,175    1,805,220                
          Total constructive dividends       4,457,835    2,504,822                   
          Below, we set out the facts relevant to respondent’s                        
          determinations regarding constructive dividends.                            
               A.   Constructive Dividends From ECI                                   
                    1.   Diversion of Checks From Unidentified Loans,                 
                         Diversion of Tag Refunds, and Excess Payoffs                 
               Petitioners concede that the amounts respondent determined             
          ECI distributed as diverted checks on unidentified loans,                   
          diverted tag refunds, and excess payoffs constitute constructive            
          dividends to ECI’s shareholder(s) for 1994 and 1995.                        
                    2.   Cash Distributions to Mr. Cordes                             
               In 1995, ECI issued checks to Mr. Cordes in the amounts of             
          $200,000 and $400,000.  ECI recorded the amounts of the checks in           
          its “Paid-In Capital” account.                                              


               5The $800,000 was a check made payable to John Cordes.                 
          Although the parties stipulated that it was a cash distribution             
          to Edmund J. Cordes, we treat it as a cash distribution of                  
          $800,000 to John Cordes, and we refer to it as such.                        
               6The parties refer to these items as “Diversion of checks              
          from Chapter 13”.  The parties have failed to explain fully the             
          significance of chapter 13, and we surmise by a careful review of           
          the record that these checks were paid to CFC from chapter 13               
          trustees representing funds CFC received as a creditor to                   
          bankruptcy estates.                                                         




Page:  Previous  1  2  3  4  5  6  7  8  9  10  11  12  13  14  15  16  17  18  19  20  Next

Last modified: May 25, 2011