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Petitioners argue that their residence at 1106 W. Dianne
and then at 404 North Shore Drive was the Asset Trust
"headquarters", and, therefore, they could deduct all operational
expenses connected thereto. We disagree. Petitioners' attempt to
legitimize payment of their personal expenses is unavailing. In
addition to the fact the trusts were not conducting a trade or
business, the expenses were personal in nature which preclude
their deductibility. The first factor weighs against
petitioners.
As to the second Markosian factor, the trusts lacked an
independent trustee. But for Bartoli's 6-day stint as trustee of
the Asset Trust, the Muhichs were at all times sole trustees of
all trusts. The fact that Bartoli served as trustee for a
limited time is meaningless; it was a paper appointment solely
for the purpose of facilitating the creation of the trust scheme.
The second factor weighs against petitioners.
As to the third Markosian factor, no economic interest in
the trusts ever passed to any beneficiary other than the Muhichs.
The only beneficiaries were the Muhichs or other trusts they
created and controlled under the trust scheme. The third factor
weighs against petitioners.
As to the final Markosian factor, the Muhichs were not bound
by any restriction imposed by the trusts or the law of trusts as
to the use of trust property. The record demonstrates
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