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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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