- 94 -
The present case is more similar to Heitz v. Commissioner,
T.C. Memo. 1998-220.73 In Heitz, the taxpayers made loans to a
corporation of which the taxpayer husband was the controlling
shareholder, president, and CEO. An accrual basis taxpayer, the
corporation fully deducted interest on the taxpayers’ loans
during the accrual year. However, because a portion of the
interest was not paid until the following year, the taxpayers,
who used the cash basis method, reported that portion in the year
of receipt. We concluded in Heitz that the taxpayers
constructively received that portion as interest income during
the accrual year. After acknowledging the taxpayer husband’s
authority, as the corporation’s president and CEO, to order
payment of the accrued interest, we based our decision on the
taxpayers’ failure to show that they lacked the right to demand
payment or that the corporation lacked the funds to pay them.
Heitz v. Commissioner, supra; see also Zimco Elec. Supply Co. v.
Commissioner, T.C. Memo. 1971-215.
After examining what little evidence the parties presented
with respect to this issue, we conclude that Menards set apart
73The taxpayers in Heitz v. Commissioner, T.C. Memo. 1998-
220, did not appeal our decision with respect to the constructive
receipt of interest income. See Exacto Spring Corp. v.
Commissioner, 196 F.3d 833 (7th Cir. 1999).
Page: Previous 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 100 101 102 NextLast modified: May 25, 2011