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On his 1994 Federal income tax return, Alsop reported gross
receipts of $12,000, expenses of $4,257, and net profits of
$7,743 relating to the chiropractic practice.
For 1992, 1993, and 1994, respectively, the trusts that
Alsop established filed untimely U.S. Fiduciary Income Tax
Returns.4 On the trust income tax returns that were filed with
respondent, certain amounts of gross receipts, expenses, and net
profits relating to the chiropractic practice were reported.
Also, however, on the income tax returns of the trusts that were
filed with respondent, deductions were claimed for purported
distributions of trust income to the trust beneficiaries. As a
result of the distribution deductions that were claimed for each
trust, for 1992, 1993, and 1994, negative taxable income and zero
Federal income tax liability were reported for the trusts.
On his Federal income tax returns for 1992, 1993, and 1994,
Alsop did not report as taxable income any distributions from the
trusts. The record does not reflect whether other beneficiaries
of the trusts reported as taxable income on their Federal income
tax returns distributions they received from the trusts.
On audit, Alsop was not cooperative, and he did not provide
respondent with copies of the trust documents until a court order
to do so was issued on January 17, 1997. After reviewing the
4 For 1992, one of the trusts that Alsop established has yet
to file a U.S. Fiduciary Income Tax Return.
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