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reported royalty income as $81,372, which includes $80,032 of
royalties received from NPI. Respondent asserted that the
Bensons reported royalty income of $1,340; the calculation does
not include the royalties received from NPI. As with the
dividend income, we agree that the NPI royalties should not be
included in the Bensons’ royalty income to avoid the inclusion of
this income twice. We find that the Bensons reported royalty
income of $1,340 in 1994.
With respect to the Bensons’ share of NPI income, we agree
with respondent’s calculation. As we discussed supra, the
Bensons’ reported gross income includes their pro rata share of
gross income from NPI. The 1994 return of NPI reports total
income of $486,188, which consists of: (1) Gross receipts or
sales of $50; (2) royalties of $160,063; (3) gross rents of
$200,605; and (4) dividend income of $125,470. That return also
lists Burton O. Benson as a 50-percent shareholder. Therefore,
we agree with respondent that the Bensons’ reported gross income
includes their share of NPI’s income, which is $243,094.
For purposes of applying section 6501(e), we hold that the
Bensons reported gross income of $814,311 in 1994, which is
itemized as follows:
Items of reported Amount of reported
gross income gross income
Wages $196,000
Interest income 6,690
Dividends 13
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