These shareholders often serve as the company's board of directors and management and have full control of the company's day-to-day operations. Limited companies are usually not well structured and lack formality, creating opportunities for shareholders to divert income and construct other forms of constructive dividends to their own exclusive benefit. The federal court case Truesdell v. Commissioner, 89 TC 1280, Code Sec(s)61 is an example of income diversion within a closed corporation. It turns out that James Truesdell, who exclusively owned both the Asphalt Patch company and Jim T. Enterprise (incorporated by his son who was 17 years old at the time), had diverted funds from his solely owned companies to his own bank account in the year 1977 , 1978 and 1979. The diverted funds were neither reported on his tax return nor reported as income for either company. Because James controlled much of both companies' assets, he was able to manipulate books and records to avoid the attention of the company's bookkeepers and bookkeepers. Some of the tactics used involve unnumbered invoices, invoices and estimates. In conclusion of the case, the proceeds diverted by James Trusdell proved to be constructive dividends. The Truesdell case is a great example of this