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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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