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entitlement to an income tax advantage. See Prindle Intl.
Marketing, UBO v. Commissioner, T.C. Memo. 1998-164.11
Contending that they received only a share of the Hillside
Farm income, petitioners argue that they should be taxed only on
the share they actually received.12 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
the farm to be properly treated as the recipients of the income
11 On brief, petitioners also argue that creation of the
Hillside Farm allowed petitioner to qualify for Social Security
without reduction for personal service income. The record is
devoid of evidence regarding any such purpose. In any event,
that petitioners may have wished to evade earned income
restrictions for Social Security purposes scarcely bolsters their
case for recognizing the trust for Federal income tax purposes.
12 The record does not establish what ultimately happened to
the 60 percent of Hillside Farm 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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