Jerry S. Payne - Page 17

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               Petitioner testified that he would leave a WA, filled out              
          and signed by him, in the cash register or with the bartender,              
          and that Helmle could only take from the register the authorized            
          amount.  Petitioner further testified that he never received or             
          took possession of any of the money shown on the WAs.                       
               Respondent argues that petitioner’s trial testimony was                
          “self serving, inconsistent, conflicting, and generally not                 
          credible”, and that petitioner failed to produce credible                   
          evidence that the cash and food distributed pursuant to the WAs             
          were used for any business purpose.  He suggests that                       
          petitioner’s failure to call as witnesses any employees of the              
          club or any dancers suggest that their testimony would have been            
          negative.  He concludes that, because petitioner failed to prove            
          that the distributions reflected in the WAs were for any business           
          purpose, they must be considered taxable dividends to petitioner.           
               The only portion of 2618's alleged expenditures for business           
          promotion/travel that respondent treats as constructive dividends           
          to petitioner is that reflected in the WAs.  However, the WAs               
          generally support and corroborate petitioner’s characterization             
          of the expenditures, not respondent’s.  The vast majority of the            
          WAs simply contain the notation “pro mo” in addition to the date,           
          the dollar amount, and petitioner’s signature.  There is no                 
          indication that the specified dollar amounts were to be paid to             
          petitioner rather than to a third party pursuant to petitioner’s            

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Last modified: May 25, 2011