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arbitration award and entry of judgment states: “Carroll
provided * * * advice and services as an advocate for Benson.”
In fact, ownership and control of ERG and NPI was the issue for
which Mr. Carroll provided legal services.
The payment by a corporation of personal expenses of a
shareholder constitutes a constructive dividend. See Inland
Asphalt Co. v. Commissioner, 756 F.2d 1425 (9th Cir. 1985); Noble
v. Commissioner, 368 F.2d 439 (9th Cir. 1966). Accordingly, we
find and hold that Burton received a constructive dividend in
1989 of $96,748.98.
5. Automobile Expenses
ERG claimed the following amounts as deductions for
automobile and truck expenses for the years as stated:
Tax Year Amount of Deduction
1989 $10,624
1990 23,676
1993 28,308
1994 14,723
The parties stipulated that the $15,000 and the $13,500 that ERG
paid in 1990 and 1993, respectively, to purchase vehicles for
Eric and Mark were constructive dividend income to Burton. See
appendix, par. 4. Respondent argues that the balance constitutes
constructive dividend income to Burton.
Petitioners failed to substantiate any of the expenses
claimed and offered no evidence detailing the percentage that the
automobiles and trucks were used for business purposes. See
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