David Rendel and Rachel Rendel - Page 7

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                    1984).  In the Zmuda case, we held that certain offshore trust                                                                                         
                    programs similar to those established by petitioners herein                                                                                            
                    constituted shams, lacked economic substance, and were to be                                                                                           
                    disregarded for Federal income tax purposes.                                                                                                           
                              The $174,308 in profits from CCMI that in 1982 was                                                                                           
                    transferred out of CCMI and through the above offshore trusts                                                                                          
                    into the Alpha account was not reported on petitioners' 1982                                                                                           
                    Federal income tax return.                                                                                                                             
                              Howard alleges that in August of 1983 he first learned that                                                                                  
                    this Court had decided Zmuda v. Commissioner, supra, under the                                                                                         
                    authority of which the $174,308 transferred in 1982 out of CCMI,                                                                                       
                    through the offshore trusts, and into the Alpha account arguably                                                                                       
                    should be treated as taxable income to petitioners in 1982.  On                                                                                        
                    August 24, 1983, Howard conveyed the information about Zmuda and                                                                                       
                    its ramifications to petitioners.                                                                                                                      
                              On August 31, 1983, Howard, on behalf of petitioners,                                                                                        
                    "discontinued" the DCH, Ledner, DARA, Cosmos, and Alpha trusts                                                                                         
                    and closed the accounts of Ledner, DARA, and Cosmos.  The record                                                                                       
                    does not reflect whether or when the bank accounts of DCH and                                                                                          
                    Alpha were closed.                                                                                                                                     
                              Also in August or early September of 1983, Howard prepared                                                                                   
                    for petitioners a proposed amended joint 1982 Federal income tax                                                                                       
                    return (proposed amended 1982 return).  On this proposed amended                                                                                       
                    1982 return, the $174,308 in profits of CCMI that had been                                                                                             






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