Daniel L. Reeves - Page 7

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          This fact alone is not sufficient grounds for treating the costs            
          of building the floating structures as constructive dividends to            
          petitioner.  See Nicholls, North, Buse Co. v. Commissioner, supra           
          at 1238-1239.                                                               
               In support of his contention respondent argues that the                
          floating structures conferred an economic gain and benefit upon             
          petitioner because they “reflected a positive light upon                    
          petitioner’s standing in the community and his wealth”, they                
          provided “prestige and [a] positive, youthful image”, and they              
          provided security and covered moorage for his boat and jet skis,            
          and petitioner used the property approximately 10 times a year              
          for personal purposes.8                                                     
               The record does not indicate petitioner personally received            
          an economic gain or benefit from the floating structures in 1995.           
          They were under construction in 1995 and were not available for             
          use until May 28, 1996.  Moreover, title to the floating                    
          structures was in VVI’s name, and when petitioner sold his                  
          residence as part of his bankruptcy in 2002, VVI was compensated            
          for the accompanying sale of the floating structures.                       

               8 On brief, respondent additionally argued that petitioner             
          economically benefited when he used the floating structures to              
          justify draws from VVI of $1,000 per month pursuant to the lease            
          agreement between VVI and petitioner.  However, respondent did              
          not assert that the lease agreement between VVI and petitioner              
          lacked corporate purpose, that VVI was not entitled to deduct its           
          leasehold payments, or that petitioner did not report VVI’s                 
          leasehold payments as income.                                               

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