- 17 -
Contending that they received only a share of the Oak Hill
income, petitioners argue that they should be taxed only on the
share they actually received.11 It is axiomatic, however, that
taxation is concerned with “actual command over the property
taxed-–the actual benefit for which the tax is paid” and that the
transfer of formal legal title will not operate to “shift the
incidence of taxation attributable to ownership of property where
the transferor continues to retain significant control over the
property transferred.” Frank Lyon Co. v. United States, 435 U.S.
561, 573 (1978); see Sundance Ranches, Inc. v. Commissioner, T.C.
Memo. 1988-535, affd. without published opinion (9th Cir. 1990).
Petitioners clearly retained sufficient power and control over
their farm and parts businesses to be properly treated as the
recipients of the income for tax purposes. Cf. Commissioner v.
Sunnen, 333 U.S. 591, 604 (1948); Hutcherson v. Commissioner,
T.C. Memo. 1984-165.
In light of our holdings on these issues, we need not reach
respondent’s alternative argument that petitioners should be
taxed on the Oak Hill income under the grantor trust rules.
11 The record does not establish what ultimately happened to
the 60 percent of Oak Hill income allegedly distributed to BBCA.
Cf. United States v. Klaphake, 64 F.3d 435 (8th Cir. 1995) (in a
case involving the transfer of a family farm business to a Noske
trust of which BBCA was a beneficiary, the taxpayers received
cash back from BBCA on a regular basis).
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