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an appeal of this case would lie, for the value of the personal
use of corporate property to be treated as a constructive
dividend, the expenses must: (1) Be nondeductible by the
corporation; and (2) represent some economic gain or benefit to
the shareholder. Palo Alto Town & Country Village, Inc. v.
Commissioner, 565 F.2d 1388, 1391 (9th Cir. 1977) (the Tax Court
must find appropriate facts in the record to support a
determination that disallowed expenses constitute constructive
dividends to the taxpayer), affg. in part, revg. in part, and
remanding T.C. Memo. 1973-223. A corporation’s inability to
substantiate a deduction, without more, is not grounds for
treating corporate expenditures as constructive dividends to the
individual. Erickson v. Commissioner, 598 F.2d 525, 531 (9th
Cir. 1979), affg. in part and revg. in part T.C. Memo. 1976-147;
Palo Alto Town & Country Village, Inc. v. Commissioner, supra at
1391; Nicholls, North, Buse Co. v. Commissioner, 56 T.C. 1225,
1238-1239 (1971); Ashby v. Commissioner, 50 T.C. 409, 417-418
(1968). Petitioner has the burden of proving respondent’s
determinations are incorrect. See Rule 142(a).
This Court found in Vitamin Village, Inc. v. Commissioner,
T.C. Memo. 2007-272, that VVI was not entitled to claim
depreciation deductions for the costs incurred in constructing
the floating structures because it failed to substantiate its
business use of the structures in its FYE June 30, 1995 and 1996.
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