- 2 -
determinations of the following deficiencies and accuracy-related
penalties under section 6662(a):
Frank and Virginia Muhich, docket No. 21561-97
Penalty
Year Deficiency Sec. 6662(a)
1994 $18,164 $3,633
1995 21,885 4,377
Midwest Portraits Corp., docket No. 21562-97
Penalty
Year Ended Deficiency Sec. 6662(a)
June 30, 1994 $15,075 $3,015
June 30, 1995 26,090 5,218
June 30, 1996 40,137 8,027
We must decide the following issues:
1. Whether the trusts implemented and used by the Muhichs
during 1994 and 1995 should be disregarded for tax purposes
because the trusts lacked economic substance. We hold they
should.1
2. Whether the Muhichs' 1994 and 1995 gross income includes
compensation paid by Midwest in the amounts of $112,820 and
$130,193, respectively. We hold it does.
1 Respondent also raises the alternative argument that
petitioners are taxable on trust income because the trusts were
"grantor trusts". Given our holding that the trusts are shams,
we need not and do not reach this issue.
Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Next
Last modified: May 25, 2011