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formation; (2) whether the trust had an independent trustee; (3)
whether an economic interest passed to other beneficiaries of the
trust; and (4) whether the taxpayer felt bound by any
restrictions imposed by the trust itself or the law of trusts.
See Zmuda v. Commissioner, 79 T.C. at 720-722; Markosian v.
Commissioner, supra at 1243-1245; Hanson v. Commissioner, T.C.
Memo. 1981-675, affd. per curiam 696 F.2d 1232 (9th Cir. 1983).
With respect to the first factor, we look to the economic
reality of a purported arrangement to determine who actually is
the settlor of a trust, whether or not named as settlor in the
related documents. Zmuda v. Commissioner, 79 T.C. at 720.
Although the documents list Mr. Phelps as the settlor of United
Sovereigns, it appears that Mr. Phelps acted merely as a "straw
man" to form United Sovereigns. We note that Mr. Phelps, the
supposed grantor of United Sovereigns, was not called as a
witness. We infer that his testimony would not have been
favorable to petitioners. Wichita Terminal Elevator Co. v.
Commissioner, 6 T.C. 1158, 1165 (1946), affd. 162 F.2d 513 (10th
Cir. 1947).
Mr. Christal had signatory authority over the bank account
of United Sovereigns, Inc., before and after its transfer to
United Sovereigns. Mr. Christal claims that his portion of the
United Sovereigns, Inc., moneys left over at its dissolution was
used to pay off the debts of United Sovereigns, Inc. There is no
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