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Summer 1996 Dealer DirectionsTAX
COURT UPDATE Two
recent cases involve typical situations where the dealerships ended up
with tax consequences far different from those originally intended.
One case involved a dealer whose dealership loaned him money
to finance his investments and other personal expenditures.
These loans were recorded as receivables on the dealership’s
books. The IRS and the
Tax Court turned the dealer’s financing activities into one huge
constructive dividend paid to him by the dealership.
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