Rodney Noble and Jo Marie Payton - Page 14

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          receive constructive dividends because PPP had current earnings             
          and profits in both 1995 and 1996.  The distributions in excess             
          of earnings and profits first reduce her basis in PPP’s stock and           
          second, are treated as capital gain for the respective years.               
               The distributions in question were for personal expenses               
          such as the cost of petitioner’s personal vehicles, home                    
          security, and health club dues.  At trial, however, petitioner              
          testified that she is entitled to the deductions for the Mercedes           
          because she used the car for business purposes.  When asked to              
          identify how the Mercedes was used, petitioner indicated that it            
          was used to “drive to work” and to attend “formal functions”.               
          She maintains that the use of the Mercedes helped her earn money            
          and thus should be a deductible business expense.  Despite                  
          petitioner’s urging to the contrary, driving her vehicle from               
          home to work and to receptions does not establish, by itself, a             
          business use for that vehicle.  See Fausner v. Commissioner, 413            
          U.S. 838 (1973); Commissioner v. Flowers, 326 U.S. 465 (1946);              
          Feistman v. Commissioner, 63 T.C. 129, 134 (1974); secs. 1.162-             
          2(e), 1.262-1(b)(5), Income Tax Regs.  Since the corporate                  
          expenditures in question were solely for petitioner’s benefit,              
          she is taxable on the amounts distributed.                                  
               The evidence introduced by respondent supports the                     
          determination that the payments by PPP were made to or on behalf            
          of petitioner and were constructive dividends.  Petitioners have            






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