I figured that you would say this. This is what all good lawyers say. If you can’t argue the law, then argue the facts. If you can’t argue the facts, then say that they’re distinguishable.
In Terris, the taxpayer and his father were shareholders of a company that built new homes for sale to the public. The corporation sold a home to the taxpayer for $50,000. The same type of home was sold to an unrelated customer for $64,400. The IRS determined a constructive dividend of $14,400. The Tax Court agreed. The Tax Court said, “The applicable law is clear.” A bargain sale to a shareholder results in a constructive dividend equal to the difference between the FMV and the amount paid.
Here we have the same facts. The corporation builds homes and sells a home with a FMV of $1.1M to the shareholder’s son for $750,000. The dividend is the difference, $350,000. OP’s question was “Is there a constructive dividend here …?” The answer is YES.
The fact that the home was sold to the shareholder’s son is a non-distinguishable fact. There are literally hundreds of cases where amounts paid to or on behalf of a shareholder’s relatives are treated as a dividend. The constructive dividend in this case is to the shareholder, not to the son, but that wasn't OP's question.