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purposes. The Zhadanovs kept corporate records and cash in the
safe because they believed the safe was more secure than the
storage facilities at Vortex. While it is certainly true that
keeping corporate cash in a shareholder’s personal safe creates
an ambiguous ownership trail, it is not convincing evidence of
fraud that Mr. Zhadanov would do so, particularly where he used
both the corporate office and his residence for business
purposes.
For the reasons discussed, we conclude that the Zhadanovs
did not derive an economic benefit from the unreported Vortex
cash and that they did not keep the cash in their safe primarily
for their personal benefit. We hold, therefore, that the
Zhadanovs did not have constructive dividend income during the
years at issue as determined by respondent.
2. Social Security Benefits to Sam Zhadanov
Respondent alleges that Mr. Zhadanov received $6,811 in
Social Security benefits for 1993, which he did not include in
his gross income as required by section 86. Section 86(a)(1)
provides that, except as provided in section 86(a)(2), a
taxpayer’s gross income includes the lesser of one half of any
Social Security benefits received by the taxpayer during the
taxable year or one-half of the amount determined under section
86(b)(1).
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