John F. Moran - Page 16

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          convincingly demonstrates that petitioner appropriated for                  
          personal use the diverted corporate receipts and the proceeds               
          from checks for fictitious expenses.                                        
               Petitioner also argues that some of the diverted funds were            
          used to pay expenses related to the horse racing and beauty shop            
          businesses.  “[P]ayments made for the personal benefit of a                 
          shareholder by a corporation may constitute constructive                    
          dividends.”  Falsetti v. Commissioner, supra at 356.  The parties           
          stipulated that petitioner and Ms. McNamara owned these                     
          businesses as sole proprietors.  These payments are of expenses             
          for petitioner and Ms. McNamara’s proprietorships, not corporate            
          business expenses.  Because the beauty shop and horse racing                
          businesses were not corporate assets, any expenditure made in               
          connection with these businesses did not benefit the corporation.           
          See Truesdell v. Commissioner, supra at 1293-1294.                          
               B.  Use of Corporate Property                                          
               Respondent also determined that petitioner failed to report            
          additional constructive dividends of $11,233 in 1988, $20,439 in            
          1989, and $8,060 in 1990, because “Moran General Constractors               
          [sic] Inc. * * * permitted you to use corporate property for your           
          personal use without compensation.”  On brief, petitioner failed            
          to address this issue.  Respondent argues that his determination            
          should be sustained because petitioner failed to offer any                  
          evidence at trial relating to this issue.                                   






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