Eric B. Benson, et al. - Page 24

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               The parties disagree as to the amount of the Bensons’                  
          reported gross income from NPI’s 1989 Form 1120S.  The Bensons              
          argue that the Hercules payment of $483,098 was reported on NPI’s           
          amended 1989 Form 1120S, and that the entire $119,508 of gross              
          rental income reported on the 1989 return of NPI should be                  
          included in the Bensons’ reported gross income.  Respondent                 
          argues the Bensons reported only their pro rata share of NPI’s              
          reported gross income on its original 1989 return.                          
               As we found supra, the Hercules payment was disclosed only             
          on the amended return of NPI, not the original return.  Because             
          “return” in section 6501(e)(1)(A) does not include amended                  
          returns, see Houston v. Commissioner, 38 T.C. at 489; Goldring v.           
          Commissioner, 20 T.C. at 81, the Hercules payment is not included           
          in the Bensons’ reported gross income.                                      
          We also disagree with the Bensons that the entire $119,508                  
          of NPI’s reported income from real estate activities is included            
          in their reported gross income.  For purposes of section                    
          6501(e)(1)(A), taxpayers’ reported gross income includes their              
          pro rata share of gross income from passthrough entities, such as           
          an S corporation.  Benderoff v. United States, 398 F.2d at 135;             
          Roschuni v. Commissioner, 44 T.C. at 85-86.  On its original 1989           
          Form 1120-S, NPI reported gross income from real estate                     
          activities of $119,508, and listed Burton O. Benson as a 66.7-              
          percent shareholder of NPI.  Therefore, we find that the Bensons’           

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