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church’s youth activities and felt he had a responsibility toward
the youth in his church, which factors led him to cause the
checks to be issued to and for the benefit of his church. Such
charitable motivations, absent some link to the corporation, are
personal. These payments by the corporation bestowed an economic
benefit on Mr. Wright, who was the true charitable donor based on
the economic reality of the transactions, and thus the
distributions out of the corporation to facilitate the youth
retreat from the Wrights’ church were taxable constructive
dividend income to Mr. Wright.
Lexus
Petitioners dispute respondent’s determination that the
$12,155 paid to Lexus on July 10, 2001, was a constructive
dividend to Mr. Wright. Though HJ Builders did not deduct the
$12,155 payment to Lexus as a business expense on its Form 1120,
petitioners now argue that the purchase of the Lexus was a
capital expenditure by the corporation and not properly
characterized as an actual or constructive payment to Mr. Wright.
The Lexus vehicle for which payment was made by the
corporation was registered in the name of Mr. Wright
individually, not HJ Builders. The vehicle was driven
exclusively by Mrs. Wright, who was not a salaried employee of
the corporation. The corporation’s check stub characterized the
payment to Lexus as a loan payable to P. Wayne Wright.
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