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more plausible explanation is that he was advised that, in view
of his reported income, claiming the actual amount of charitable
contributions would increase the likelihood of audit. The cash
contributions made would have approached but not exceeded the
50-percent limitation of section 170(b)(1), and the charitable
contributions made from corporate funds would have brought the
amount to more than 50 percent of the reported income.
Respondent now would allow all of the charitable contributions
because of the increase in the Wrights’ reportable income,
subject to overall reductions in accordance with section 68(a)
applicable to 2001.
Cash Disbursements to Mr. Wright
Respondent argues that the $72,000 in disbursements at issue
from HJ Builders to Mr. Wright was dividend distributions and
taxable income to the Wrights. Petitioners argue that the
disbursements were in repayment of loans previously made by
Mr. Wright to the corporation.
The evidence presented by petitioners is inconsistent
regarding the nature of the cash payments. Petitioners argue
that the amounts in Wayne’s Ledger reflect repayments of previous
loans made by Mr. Wright to HJ Builders. However, a handwritten
notation on Wayne’s Ledger instead states that the disbursements
between June 5, 2001, and May 2, 2002, totaling $132,000 reflect
loans to Mr. Wright. We conclude that Wayne’s Ledger is
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