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by the corporation making the disbursement.” United States v.
Mews, 923 F.2d 67, 68 (7th Cir. 1991). Furthermore, to be a
constructive dividend to a shareholder, the corporation need not
pay it directly to the shareholder. Id.
It is clear that when a corporation confers an economic
benefit upon a shareholder without expectation of reimbursement,
that economic benefit becomes a constructive dividend. Loftin &
Woodard, Inc. v. United States, 577 F.2d 1206, 1214 (5th Cir.
1978); Thorpe v. Commissioner, T.C. Memo. 1998-115. For example,
the amount of taxes paid by a corporation on behalf of and for
the benefit of a shareholder was held to be a constructive
dividend. Inland Asphalt Co. v. Commissioner, 756 F.2d 1425 (9th
Cir. 1985), affg. T.C. Memo. 1982-463. Corporate payment of a
shareholder’s personal expenses constituted a constructive
dividend. Dobbe v. Commissioner, 61 Fed. Appx. 348 (9th Cir.
2003), affg. T.C. Memo. 2000-330. Payments by a corporation for
painting and repairs made to a shareholder’s family residence and
travel expenses incurred for personal purposes were deemed to be
constructive dividends. Grossman v. Commissioner, 182 F.3d 275
(4th Cir. 1999), affg. T.C. Memo. 1996-452; Noble v.
Commissioner, 368 F.2d 439 (9th Cir. 1966). And use of a
corporate-owned luxury automobile for personal purposes
constituted a constructive dividend. Mohan Roy, M.D., Inc. v.
Commissioner, T.C. Memo. 1997-562, affd. 182 F.3d 927 (9th Cir.
1999).
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