- 16 - T.C. 387, 395 (1955); Thielking v. Commissioner, T.C. Memo 1987- 227, affd. without published opinion 855 F.2d 856 (8th Cir. 1988). RAF cites Murphy v. Country House Inc., 349 N.W.2d 289 (Minn. Ct. App. 1984), for its assertion that Minnesota law prohibits disproportionate constructive dividends. However, that case held that bonuses paid to shareholder-employees constituted disproportionate dividends and that the shareholder who was not paid was entitled to his share of the dividend. Id. at 293. We conclude that RAF’s payments of the charges at issue were constructive dividends to Mr. Lenzen as a shareholder of RAF. III. The Lenzens’ Unreported Gambling Income The Lenzens admit that they received $13,619 of unreported gambling income in 1999. They claim that they suffered an equal amount of unreported gambling losses and are not liable for income tax on the additional gambling winnings. The Lenzens did not present at trial any records of the additional winnings or losses. Section 165(d) allows a deduction for gambling losses only to the extent of gambling winnings. The Lenzens have the burden of proving that their alleged gambling losses were in fact sustained. See Green v. Commissioner, 66 T.C. 538, 544 (1976). Section 6001 and the regulations thereunder require taxpayers to keep permanent records sufficient to substantiate the amounts of gross income, deductions, and credits shown on their income taxPage: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 Next
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