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file memoranda on or before June 10, 2004, regarding the Court’s
order to show cause. Petitioner did not file her memorandum with
the Court until July 26, 2004. On July 26, 2004, the Court made
absolute in part and discharged in part the order, deeming some
records admitted over petitioner’s evidentiary objection.
When the case finally came to trial, the Court spent more
time admitting documents which petitioner could and should have
stipulated. On September 22, 2004, respondent spent
approximately 45 minutes examining Berson, moving into evidence
over 20 business records which petitioner had refused to
stipulate. These documents were moved into evidence either with
no objection from petitioner, or over meritless objections wholly
lacking in legal foundation.
OPINION
I. Dividend Income
We decide whether respondent arbitrarily or erroneously
determined that petitioner failed to recognize $1,149,048 in
dividend income for 1996. Gross income includes any dividend
received, whether or not formally declared, when distributed by a
corporation to the beneficial owner of the corporation. See sec.
61(a)(7); Loftin & Woodard, Inc. v. United States, 577 F.2d 1206,
1214 (5th Cir. 1978); Walker v. Commissioner, 544 F.2d 419 (9th
Cir. 1976), revg. T.C. Memo. 1972-223; Dean v. Commissioner,
57 T.C. 32, 40 (1971). A constructive dividend exists where a
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