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of intent and does not control our decision. See Turner v.
Commissioner, 812 F.2d at 654; Cordes v. Commissioner, T.C. Memo.
1994-377. Constructive dividends are more likely to originate
from a closely held corporation where decisions between a single
stockholder and the corporation are often one and the same.
Zhadanov v. Commissioner, T.C. Memo. 2002-104.
Petitioner argues that she could not have received dividends
from PPP for either 1995 or 1996 because PPP had deficits in its
accumulated earnings and profits for both years. Section 316 and
its regulations provide that distributions to shareholders with
respect to their stock must be treated as dividends to the extent
of both current and accumulated earnings and profits. “To the
extent that a corporation has current earnings and profits as of
the close of its taxable year, any distribution made in that year
will be presumed to be made out of such current earnings and
profits.” Brock v. Commissioner, T.C. Memo. 1982-335; see sec.
316(a); sec. 1.316-1(a)(1), Income Tax Regs. If the
distributions for the year exceed the amount of current earnings
and profits the excess is deemed to have been made out of any
accumulated earnings and profits. Prescott v. Commissioner, T.C.
Memo. 1983-709. Any portion of the distribution that does not
qualify for dividend treatment shall be applied against the
shareholders’ basis in their stock, and any excess shall be
treated as gain. Sec. 301(c). Thus, petitioner was able to
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