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utilized the cash method of accounting for tax purposes and was
an S corporation.
The Benson family’s percentage of ownership in NPI was
listed on its tax returns for the individuals, for the years, and
in the amounts as stated:
Year of NPI Return
Individuals 1988 1989 1990 1991 1992 1993 1994
Burton 66.7 66.7 66.7 66.7 50.0 66.7 50.0
Esther 33.3 33.3 33.3 33.3 50.0 –- –-
Eric –- –- –- –- -- 11.1 16.7
Brad –- –- –- –- –- 11.1 16.7
Mark –- –- –- –- –- 11.1 16.7
Throughout the years at issue, there was no written
agreement between ERG and NPI relating to engineering, design, or
management services, NPI did not treat anyone as an employee, and
no Form 941, Federal Payroll Tax Returns, was filed or Form 1099
was issued. During this same period, NPI maintained a money
market account with Merrill Lynch Pierce, Fenner & Smith, Inc.,
account No. 280-07017-8 (NPI’s bank account).
During the years at issue, NPI owned three parcels of real
property located in Oakland, California: (1) 952 57th Street
(Lowell plant); (2) 900-960-962-964 Stanford Avenue (Stanford
plant); and (3) vacant land adjacent to 900 Stanford Avenue
fronting on Lowell Street. Before and after July 1, 1987, ERG
conducted its foam metal manufacturing operations from the
Stanford Plant.
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Last modified: May 25, 2011