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equipment for use in Mexico, and $18,000 was invested in sheep in
New Zealand. The ultimate disposition of the approximate
$402,625 remaining in the above cumulative 3-year net income of
LPS is not disclosed in the record. Approximately $100,000 was
also invested in commodity accounts.
For 1994, 1995, and 1996, Zero Gee timely filed its Federal
Income Tax Returns for Estates and Trusts. None of the business
income earned by LPS was reported on petitioners’ joint income
tax returns for 1994, 1995, or 1996.
On Zero Gee’s income tax returns for each of the above
years, distributions equal to the total annual net income of Zero
Gee were claimed as income distribution deductions to the named
beneficiaries of the trust, and no taxable income was reported
for Zero Gee.
For 1994, 1995, and 1996, petitioners timely and jointly
filed their Federal income tax returns and reported thereon wages
and consulting income both from Zero Gee as follows:
Year Wages Consulting Income
1994 $ 0 $103,820
1995 4,000 72,315
1996 29,000 100
Cumulative Total $33,000 $176,235
Petitioners did not report as income on their joint income
tax returns any of the amounts represented by the income
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