- 28 -
1. Omitted Gross Income
We disagree with the Bensons’ calculation of 1994 omitted
gross income. The Bensons concede that they omitted gross income
of $119,026 from their 1994 return. For the reasons discussed
supra, we also find that the Bensons’ omitted gross income
includes the $160,063 transferred from ERG to NPI, the excess
rent of $63,444 received for the Stanford plant, and the rent of
$41,736 received for the Lowell plant.
Respondent provided only the total figure for the Bensons’
omitted gross income in 1994. In his calculations of omitted
gross income in 1989, 1990, and 1993, respondent reduced the
total omitted gross income by amounts described as “Reverse * * *
income recharacterized as constructive dividends”. In our
calculation, we credit the Bensons with a “reverse” of the
payment from ERG to NPI that is recharacterized as constructive
dividends of $80,032 because the Bensons reported this amount on
their 1994 return.
The 1994 return of NPI included gross rents of $200,605.
Because the return does not itemize the properties that generated
this income, we assume that the rents received from the Lowell
and Stanford plants are included in NPI’s total gross rents. In
calculating omitted gross income, we will credit, or “reverse”,
the Bensons’ pro rata shares of rental income from the Lowell and
Stanford plants. In other words, the “reverse” ensures that the
Page: Previous 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 NextLast modified: May 25, 2011