William H. Breucher III - Page 15

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          collateral in consideration for these “advances”.  Bruecher                 
          Foundation did not ask for or charge Mr. Bruecher interest and              
          did not require a repayment schedule for such “advances”.                   
          Bruecher Foundation did report the “advances” as a liability on             
          each of its Forms 1120 for the fiscal tax years 1998 and 1999.              
               As previously noted, in the notice of deficiency issued to             
          Mr. Bruecher, respondent determined for tax years 1998 and 1999             
          that he received constructive dividends in the amounts of $33,082           
          and $48,112, respectively.  The computation of these amounts was            
          previously explained.  Furthermore, Mr. Bruecher did not argue              
          that such amounts were inaccurate.                                          
               Mr. Bruecher argues that he intended, in good faith, to                
          create a debtor/creditor relationship with Bruecher Foundation              
          and that he did have the intent of repaying these “advances”.               
          However, the only evidence presented by Mr. Bruecher which would            
          indicate that these “advances” were loans was the corporate                 
          income tax returns (Forms 1120) and Mr. Bruecher’s self-serving             
          testimony.  However, while this evidence is to be considered, it            
          is not controlling.  “Book entries and records may not be used to           
          conceal a situation which is not in reality what it is made to              
          appear.”  Fenn v. Commissioner, T.C. Memo. 1980-229.                        
               Based upon the objective circumstances, we must reject Mr.             
          Bruecher’s contention that the “advances” at issue were bona fide           
          loans.  We conclude that such amounts were constructive dividends           

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