- 31 -
Additional dividends 586
ERG transfers to NPI 160,063
Reverse of payments from ERG 1(80,032)
to NPI income recharacterized as
constructive dividends
ERG payment related to 41,736
Lowell plant
Reverse Lowell plant rental 1(20,868)
income recharacterized as a
constructive dividend
ERG payment related to 63,444
Stanford plant
Reverse Stanford plant rental 1(31,722)
income recharacterized as a
constructive dividend
Cancellation of indebtedness 88,291
income
Franklin account 1,072
Total 337,092
1 This amount represents a negative number.
2. Reported Gross Income and 25-Percent Omission
The parties agree that the Bensons reported gross income of
$533,268 in 1994, which consists of: (1) Wages of $196,000; (2)
capital gain distributions of $492; (3) rental income of $36,156;
(4) $200,000 of “other income” or salary from NPI; and (5) income
of $100,620 from the Evelyn Hermsmeir partnership. In addition,
respondent concedes that the Bensons’ reported a taxable refund
of $29,327 and $579 from their share of Baden Spiel Haus
partnership income. The parties dispute the following items of
reported gross income: (1) Interest income; (2) dividend income;
(3) royalty income; and (4) NPI income.
The parties agree that the Bensons reported interest income
of $7,105 on their 1994 return. However, respondent’s
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