Frank and Virginia Muhich - Page 16

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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                       
          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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