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in the record to show she was not a highly compensated employee
in 1997. Although we allocate the pool to ATV for entertainment
use, we hold ATV is not entitled to deduct the pool repair
expenses because of its failure to maintain the proper records.
We hold ATV’s payment of 100 percent of the utilities is a
constructive dividend to Mr. Cutts to the extent of 11 percent
thereof allocable to Mr. Cutts’s personal use. If shareholders
use corporation-owned property for personal purposes, they will
be charged with additional distributions from the corporation,
taxable to them as constructive dividend income if the
corporation has sufficient earnings and profits. See Ireland v.
United States, 621 F.2d 731, 735 (5th Cir. 1980); Melvin v.
Commissioner, 88 T.C. 63, 80 (1987), affd. 894 F.2d 1072 (9th
Cir. 1990).
We hold ATV is entitled to deduct 89 percent of the Landmark
Hall utilities expense as attributable to its business use of the
property. The corporation will not be allowed to deduct costs of
maintaining property allocable to its shareholders’ personal use
of such property. See United Aniline Co. v. Commissioner, 316
F.2d 701, 705 (1st Cir. 1963); Melvin v. Commissioner, supra.
The amount of ATV’s disallowed pool repair expense is not a
constructive dividend to Mr. Cutts because we allocated the pool
to ATV for entertainment use for the primary benefit of its
employees rather than for the primary benefit of Mr. Cutts or any
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