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two entities. There is no evidence upon which we can find that
the transfers of funds by ERG to NPI served any business purpose.
The Bensons substantially benefited economically from those
transfers through NPI’s disbursement of millions of dollars for
the Benson family’s personal use and enjoyment. Accordingly, we
find the Bensons enjoyed considerable economic benefits from the
ERG transfers and expenditures.
Nonconstructive Dividend Issues
1. Franklin Dividends
The Bensons conceded that they had additional, unreported
dividend income from their Franklin account #1 for all the years
at issue except 1994. In 1994, $1,072 was credited as dividends
to this account. The stipulated evidence demonstrates that the
account was held in the Bensons’ name, although the account bore
the Social Security number of Eric. All the funds deposited into
this account are attributable to the Bensons. Despite the fact
that Eric reported the amount credited on his 1994 return, the
dividends are clearly attributable to the Bensons and should have
been reported by them. Thus, we find and hold that the Bensons
had additional dividend income in 1994 of $1,072.
2. Forgiveness of Debt Income
On its returns, ERG’s “loans to stockholders/officers” were
reduced from $88,291 in 1987 to $0 in 1988. Respondent argues
that the forgiveness of the debt was income to the Bensons in
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