- 71 -
petitioners fail to demonstrate a business purpose for any of
these expenditures and otherwise fail to substantiate any of the
items. Furthermore, expenses for Esther’s memorial services are
clearly personal and noncorporate expenses. Accordingly, we find
and hold that Burton had constructive dividend income of
$3,889.63
12. Legal Expenses
In 1994, ERG paid legal expenses of $4,660.19. Respondent
determined that $4,159 constituted a constructive dividend to
Burton.64 The stipulated invoices provide some explanation of
the nature of the charges incurred.
Although we generally agree with respondent, the face of the
invoices grant the Bensons some relief. For example, $126 in
63Respondent appears to have double-counted a charge of
$223.82. In his opening brief, respondent lists the amount still
at issue as $6,690. Apparently, this amount is the aggregate of
those items listed on the ERG travel expense report dated Feb. 9,
1994, $616.47, the expense report dated Oct. 4, 1994, $833.06,
and the amounts the parties stipulated totaling $5,241.24.
However, the amount $223.82 concerning a charge at a hotel in
Corvallis, Oregon, is listed twice. Thus, an amount equal to
$223.82 should be backed out of respondent’s determination.
Thus, we calculate Burton’s constructive dividend as follows:
$6,690 less $2,576.94 of substantiated expenses less $223.82.
64We are unable to resolve the apparent discrepancy between
the amount listed in the notice of deficiency and the amount
shown on the documentary evidence. Similarly, respondent asked
us to find as fact that in 1994 ERG paid legal bills of $4,159.
Without an explanation to the contrary, we assume that respondent
has conceded the difference.
Page: Previous 61 62 63 64 65 66 67 68 69 70 71 72 73 74 75 76 77 78 79 80 NextLast modified: May 25, 2011