- 7 -- 7 -
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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