- 13 -
respondent’s position that Universal was a sham.5 For example,
one request stated that “There has been no change in the use of
assets assigned or transferred to the Universal Trust as a result
of such transfer or assignment.”
On April 26, 2000, the Court filed respondent’s Motion to
Compel Responses to Respondent’s Interrogatories. That motion
stated:
the primary issue is whether Universal Trust, created
by petitioners Ghavami and Johnston; should be
disregarded for tax purposes due to its lack of
economic substance and attempted assignment of income
with the result that the net income reported by the
trust, is properly reported by petitioners Ghavami and
Johnston.
On June 19, 2000, during the hearing on the cross-motions in
Universal, the Court brought to petitioner’s attention and
discussed for his benefit the assignment of income, sham trust,
and grantor trust theories. On June 20, 2000, the Court told
petitioner that trial of the case at hand would begin on June 27,
2000. The Court arranged this 1-week delay in order to give
petitioner yet more time to gather evidence and to encourage the
parties to stipulate as many facts as possible.
5 Among the factors we consider, in deciding whether a
purported trust is a sham for tax purposes, is whether the
grantor’s relationship to the property transferred to the trust
was materially different after the trust’s formation. See
Markosian v. Commissioner, 73 T.C. 1235, 1243 (1980).
Page: Previous 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 NextLast modified: May 25, 2011