Eric B. Benson, et al. - Page 15

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               Similarly, the Bensons argue that the NPI returns disclosed            
          engineering services paid by ERG to NPI.  In our prior opinion,             
          we found:                                                                   
               ERG transferred millions of dollars to NPI for payment                 
               of supposed “engineering services”.  However, there is                 
               no evidence of what services Burton performed on behalf                
               of NPI other than his testimony that he provided ERG                   
               with engineering “know how”.  No third party testified                 
               as to what Burton specifically did.  There is no                       
               evidence of how much time he devoted to this endeavor                  
               and whether the amounts charged were reasonable and                    
               customary.  In fact, we infer from the evidence that in                
               conjunction with the exclusive licensing agreement, the                
               label “engineering services” was created to achieve                    
               Burton’s goal of having ERG show a consistent paper                    
               profit of approximately $75,000.  * * *                                
          After reviewing the NPI returns, we find that these returns lack            
          any specific reference to engineering services.  Additionally,              
          like the royalties that NPI purportedly received from ERG, we               
          find that any characterization of the ERG transfers to NPI as               
          payments for engineering services was misleading.  Burton Benson            
          caused ERG to make these transfers to NPI for the purpose of                
          maintaining ERG’s profits at $75,000.  He used the “engineering             
          services” explanation to justify these payments.9  We find that             

               9 Like the royalty invoices, the 1993 invoices for                     
          engineering services were not created contemporaneously with the            
          alleged performance of these services:  “Burton admitted * * *              
          that these invoices were created shortly before an audit meeting            
          with a revenue agent.”  Benson v. Commissioner, supra.                      

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