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We agree with respondent. By failing to introduce any
evidence or argument to refute respondent’s determination, we
find that petitioner has failed to prove that the determination
was incorrect. Accordingly, we find that petitioner received
constructive dividends for personal use of corporate property.
See Melvin v. Commissioner, 88 T.C. at 79; Falsetti v.
Commissioner, 85 T.C. at 356.
C. Earnings and Profits
During the years in issue, the corporation reported on its
financial statement current net income after tax of $86,399 in
1988, $81,511 in 1989, ($15,244) in 1990, and ($3,673) in 1991.5
The corporation reported on its financial statements retained
earnings of $184,127 in 1988, $265,638 in 1989, $250,394 in 1990,
and $246,765 in 1991. To determine petitioner’s constructive
dividends, the corporation’s reported earnings and profits should
be increased by the amounts of gross receipts that were not
included in the corporation’s income. See DiLeo v. Commissioner,
96 T.C. at 888; see also Yellow Cab & Car Rental Co. v.
Commissioner, T.C. Memo. 1974-79. After adjustments are made for
the amounts of gross receipts diverted from the corporation, the
corporation had sufficient earnings and profits to support our
5 The corporation’s fiscal year ended on Sept. 30 for each
of the years in issue. We have included the reported income and
retained earnings and profits for the corporation’s 1991 year
because it includes October, November, and December of the 1990
calendar year.
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