Frank W. George - Page 15




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          Commissioner determined that the taxpayer had unreported income              
          without substantive evidence linking the taxpayer to the income.             
          See United States v. Janis, supra at 437, 441; Portillo v.                   
          Commissioner, supra at 1133-1134; Weimerskirch v. Commissioner,              
          supra at 361-362.  Here, there is evidence clearly linking                   
          petitioner to the income he diverted to Arivada.  Thus, the                  
          notice of deficiency is presumed to be correct, and the burden is            
          on petitioner to rebut this presumption.  See Rule 142(a); Welch             
          v. Helvering, 290 U.S. 111 (1933).                                           
               2.   Whether Arivada Was a Sham and Lacked Economic                     
                    Substance                                                          
               Respondent contends that Arivada should not be recognized               
          for Federal income tax purposes because it is a sham and lacked              
          economic substance.  Petitioner contends that Arivada is not a               
          sham.                                                                        
               A trust which lacks economic substance and has no purpose               
          other than tax avoidance is not recognized for Federal tax                   
          purposes.  See Neely v. United States, 775 F.2d 1092, 1094 (9th              
          Cir. 1985); Zmuda v. Commissioner, 731 F.2d 1417, 1421 (9th Cir.             
          1984), affg. 79 T.C. 714 (1982); Markosian v. Commissioner, 73               
          T.C. 1235, 1245 (1980); Furman v. Commissioner, 45 T.C. 360, 364             
          (1966), affd. per curiam 381 F.2d 22 (5th Cir. 1967).  Petitioner            
          presented no credible evidence that Arivada had economic                     
          substance or was formed for any reason other than tax avoidance.             







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