- 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’sPage: Previous 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 Next
Last modified: May 25, 2011