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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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