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898 F.2d 455 (5th Cir. 1990), affg. T.C. Memo. 1989-189; Kelley
v. Commissioner, T.C. Memo. 1983-322.
Alsop argues that the trusts he established constitute valid
business entities that should be recognized as taxable entities
and that the gross receipts, expenses, and net profits relating
to the chiropractic practice should be charged to the trusts.
Respondent contends that the trusts constitute sham family trusts
that lacked economic reality, that the trusts were used only for
tax avoidance purposes, and that the agreed net profits of the
trusts are chargeable to Alsop. We agree with respondent.
The evidence establishes that Alsop's chiropractic practice
operated essentially the same after the trusts were established
as it did before the trusts were established. Alsop continued
treating patients at the same office under the same business
name. Alsop and his secretary continued to sign the checks
relating to the chiropractic practice. The trustee did not
perform any duties as trustee regarding the chiropractic
practice, and the trustee received no compensation. Alsop
retained control over his chiropractic practice and over the
receipts, expenses, and taxable income relating to the
chiropractic practice.
The evidence in the record is not complete as to what, how
much, and to whom distributions were made from the trusts and as
to how beneficiaries of the trusts reported on their Federal
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