Alan D. Lenzen and Dianne Lenzen - Page 11

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          substantiation.  Hradesky v. Commissioner, 65 T.C. 87, 89-90                
          (1975), affd. per curiam 540 F.2d 821 (5th Cir. 1976).                      
               The Lenzens used the corporate card for purchases at                   
          restaurants, gas stations, clothing stores, hotels, and general             
          retail stores, among others.  Mr. Lenzen testified that he was              
          not able to provide business reasons or substantiation for the              
          charges at issue because either they were for personal expenses             
          or he could not recall whether they were for business expenses.             
          Mrs. Lenzen did not testify at trial.  Although Mr. Lenzen                  
          testified that Mrs. Lenzen did some promotional work for RAF,               
          including sales trips, he also stated that it was likely that               
          almost all of the charges made by Mrs. Lenzen on the corporate              
          card were for personal expenses.  Petitioners did not present               
          specific evidence with respect to the charges at issue that would           
          show that any of them were not personal.  Without more than vague           
          testimony, we cannot conclude that any of the charges at issue              
          were ordinary and necessary business expenses of RAF.                       
          Petitioners have not met their burden of showing that any of the            
          remaining charges were not personal expenses of the Lenzens.                
               B.   Characterization of the Payments of Personal Expenses             
               Respondent argues that RAF’s payments of the Lenzens’                  
          personal expenses were constructive dividends to Mr. Lenzen as a            
          shareholder of RAF.  Petitioners first argue that RAF’s payments            
          were repayments of amounts Mr. Lenzen lent to RAF.                          






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