Rameau A. and Phyllis A. Johnson - Page 49

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            take all the language quoted above at face value.  On brief they                          
            take the position that, unlike the portion of the VSC contract                            
            price allocable to the PLRF, the portions of the contract price                           
            allocable to Fees and Premium "were not received by the issuing                           
            Dealership in trust," notwithstanding the express language in the                         
            Administrator Agreement to the contrary.  They offer no                                   
            explanation for this apparent inconsistency.  If we look beyond                           
            the language to the function and actual effect of the agreements                          
            as well as to the conduct of the parties, we find no support for                          
            petitioners' interpretation.                                                              
                  (1) The Reserves Could Not Have Been Collected From the                             
                        Purchaser in Trust Under the VSC, Because the Rights                          
                        of the Purchaser Under the VSC Did Not Relate to Any                          
                        Specific Trust Property                                                       
                  A trust is a relationship in which rights are created with                          
            respect to the specific property transferred by the settlor to                            
            the trustee.  Thus, under the preneed funeral arrangement in                              
            Angelus Funeral Home v. Commissioner, 47 T.C. 391 (1967), and the                         
            arrangement for prepaid legal fees in Miele v. Commissioner, 72                           
            T.C. 284 (1979), each of the taxpayer’s customers acquired                                
            exclusive rights in a trust fund corresponding to the amount he                           
            paid to the taxpayer.  Even though, for reasons of administrative                         
            convenience, each customer’s payment was not physically                                   
            segregated, it was credited to a separate account and entitled                            
            the customer to have an equivalent amount of assets in the trust                          
            fund used exclusively for his benefit.  The individual payment                            




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