Eric B. Benson, et al. - Page 17

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               of the excess rents that ERG paid.  [Benson v.                         
               Commissioner, supra].                                                  
               We found that the Lowell rent payments constituted                     
          constructive dividends to the Bensons because ERG made payments             
          that it had no contractual obligation to make.  We further found            
          that the payment of “rents” by ERG constituted constructive                 
          dividends to the Bensons.  The returns of NPI do not provide any            
          clues that suggest that ERG’s payments for the Lowell plant                 
          exceeded ERG’s legal obligation to make those payments.  These              
          disclosures did not adequately reveal the nature of these                   
          transfers.  Therefore, we hold that the Bensons failed to                   
          disclose the constructive dividends received in the form of                 
          purported rent payments for the Lowell plant.                               
               While the returns of NPI disclosed the receipt of rent for             
          the Stanford plant, these disclosures were misleading because               
          they did not inform respondent that the payments exceeded ERG’s             
          contractual rent obligation.  In Benson v. Commissioner, supra,             
          we stated:                                                                  
                    The maximum monthly lease amount listed in the                    
               unbundling agreement apparently reflected the product                  
               of an arm’s-length negotiation between the two warring                 
               brothers.  Under these circumstances, this is the best                 
               indication of the intent of the parties and the value                  
               of the use of the property at that time.  * * *  [Fn.                  
               ref. omitted.]                                                         
          The actual payments exceeded the monthly lease payments as agreed           
          upon in the unbundling agreement.  We think that the disclosure             
          of the rental payments is misleading because an examiner would              

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