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The Houston Texans football team played its first regular
season home game at Reliant Stadium on August 24, 2002.
On April 4, 2003, after the petition was filed in this case,
petitioner asked the Harris County-Houston Sports Authority to
transfer his permanent seat license to InsurMark.
C. Petitioners’ Returns and Respondent’s Determination
Petitioners filed Federal income tax returns for 1998 and
1999. Respondent determined that petitioners had unreported
income of $8,229 for 1998 and $8,916 for 1999, in the form of
constructive dividends from InsurMark for its payment of their
personal expenses.
Discussion
Petitioners contend that Insurmark’s purchase of the
permanent seat license was not a constructive dividend to them in
1999. They contend that the license conferred no benefit on them
(and thus they received no constructive dividend) in 1999 because
the Houston Texans football team (and Reliant Stadium) did not
exist in 1999. Petitioners point out that InsurMark did not
deduct its $7,800 payment for the permanent seat license in 1999
and contend that a property right for which their corporation
claimed no deduction and which can be used only in the future
does not result in a constructive dividend to them in 1999.2
2 We need not decide whether the burden of proof shifts to
respondent under sec. 7491(a) because the facts are not in
dispute and the issue is one of law. See sec. 7491(a).
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