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Tax Year 1999
Date Amount
01/01/1999 - Beginning balance $120,325
12/31/1999 - Ending balance 177,863
Difference - Increase in balance 57,538
Corporate expenses paid by
Mr. Bruecher1 9,426
Net constructive dividends 48,112
1Such expenses could arguably be classified as contributions
of capital by Mr. Bruecher to his corporation; however,
respondent used these amounts to reduce the net constructive
dividends.
Discussion
1. Constructive Dividends
As stated previously, respondent determined that Mr.
Bruecher received constructive dividends from Bruecher Foundation
in tax years 1998 and 1999 in the amounts of $33,082 and $48,112,
respectively. However, Mr. Bruecher argues that such
distributions were loans from Bruecher Foundation and were made
with the intent of being repaid.
The Commissioner is authorized to reconstruct income in
accordance with any reasonable method that accurately reflects
actual income. Secs. 446(b), 6001; Petzoldt v. Commissioner, 92
T.C. 661, 687 (1989); Meneguzzo v. Commissioner, 43 T.C. 824, 831
(1965); see Taglianetti v. United States, 398 F.2d 558, 562 (1st
Cir. 1968), affd. on other grounds 394 U.S. 316 (1969). The
reconstruction of a taxpayer’s income need only be reasonable in
light of the surrounding facts and circumstances. Giddio v.
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