- 15 - 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.Page: Previous 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 Next
Last modified: May 25, 2011