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substance of a transaction involving this entity will control
over its form. Zmuda v. Commissioner, 731 F.2d at 1420-1421;
Markosian v. Commissioner, 73 T.C. 1235, 1241 (1980). If a trust
has no economic substance apart from tax considerations, the
trust is not recognized for Federal tax purposes. Markosian v.
Commissioner, supra at 1244-1245; Furman v. Commissioner, 45 T.C.
360, 364 (1966), affd. per curiam 381 F.2d 22 (5th Cir. 1967).
These principles apply even though an entity may have been
properly formed and have a separate existence under applicable
local law. Zmuda v. Commissioner, 79 T.C. at 720.
Whether a trust lacks economic substance for tax purposes is
a factual question to be decided on the basis of the facts before
the Court. Paulson v. Commissioner, T.C. Memo. 1991-508, affd.
per curiam 992 F.2d 789 (8th Cir. 1993) (citing United States v.
Cumberland Pub. Serv. Co., 338 U.S. 451 (1950)). Additionally,
when the settlor is trustee and the beneficiaries are the settlor
and his family, such trust arrangements must be closely
scrutinized for economic substance. Markosian v. Commissioner,
supra at 1245; see Helvering v. Clifford, 309 U.S. 331, 334
(1940). Petitioners bear the burden of proof. Rule 142(a).
We consider the following factors to determine whether a
purported trust lacks economic substance for Federal income tax
purposes: (1) Whether the taxpayer's relationship, as grantor,
to the property differed materially before and after the trust's
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