HJ Builders, Inc. - Page 19

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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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Last modified: May 25, 2011