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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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