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1183, 1191 (9th Cir. 1984)), affg. T.C. Memo. 1984-549). “The
crucial concept in a finding that there is a constructive
dividend is that the corporation has conferred a benefit on the
shareholder in order to distribute available earnings and profits
without expectation of repayment.” Truesdell v. Commissioner,
supra at 1295 (citing Noble v. Commissioner, supra at 443); see
Williams v. Commissioner, 627 F.2d 1032, 1034 (10th Cir. 1980)
(quoting Wortham Mach. Co. v. United States, 521 F.2d 160, 164
(10th Cir. 1975)), affg. T.C. Memo. 1978-306.
“To constitute a distribution taxable as a dividend, the
benefit received by the shareholder need not be considered
as a dividend either by the corporation or its shareholders,
declared by the board of directors, nor other formalities
of a dividend declaration need be observed, if on all the
evidence there is a distribution of available earnings or
profits under a claim of right or without any expectation of
repayment.” * * *
Noble v. Commissioner, supra at 443 (quoting Clark v.
Commissioner, 266 F.2d 698, 711 (9th Cir. 1959)). A
“constructive dividend” is “simply a corporate disbursement that
is a dividend in the contemplation of law though not called such
by the corporation making the disbursement.” United States v.
Mews, 923 F.2d 67, 68 (7th Cir. 1991). Furthermore, to be a
constructive dividend to a shareholder, the corporation need not
pay it directly to the shareholder. Id.
The first consideration in determining whether a
shareholder’s withdrawals or advances from a corporation
constitute loans or constructive dividends is whether, at the
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