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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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