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Richard,15 and the distribution thereby constitutes a
constructive dividend to CFC’s shareholder(s).16
Petitioners contend that John Cordes and Jean Ann Richard
never received the two $800,000 checks or the funds the checks
represented, and CFC’s shareholder(s) therefore cannot be held to
have received constructive dividends. Petitioners argue that the
two $800,000 checks were drafted merely to establish interest-
free lines of credit through CFC to John Cordes and Jean Ann
Richard and that only amounts charged to those lines of credit
and actually received by John Cordes or Jean Ann Richard may be
constructive dividends.
Petitioners’ argument that CFC did not confer a benefit on
John Cordes and Jean Ann Richard begs the question of who was the
beneficial owner of the stock nominally owned by John Cordes and
15Regarding the distribution to Jean Ann Richard, respondent
asserts that the distribution alternatively may be characterized
as a sale of stock in Edmund Cordes, Inc., by Jean Ann Richard to
CFC in exchange for (a) $800,000, which she constructively
received in 1994, or (b) $800,000 paid by installment, of which
she received $90,000 in 1994 and $120,000 in 1995.
16Upon careful review of the facts in this case and our
prior opinions involving Mr. Cordes and the Cordes corporations,
we find that Mr. Cordes was beneficial owner of all the
corporations discussed herein, including those corporations in
which respondent contends Mr. Cordes purchased stock. The facts
do not establish that Mr. Cordes used a $800,000 check to
purchase stock from John Cordes, or that CFC used $800,000 to
purchase stock from Jean Ann Richard. The facts do show that, on
March 16, 1994, Mr. Cordes and CFC became the respective record
owners of the shares in question, but Mr. Cordes’s complete
control over the corporations allowed him to alter record
ownership in any or all of the corporations at any time, without
consideration.
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