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Hae-Rong and Lucy B. Ni
Respondent increased petitioners’ gross income by $439,230
based on the alternative grounds that (1) the Nis Family Trust
and the Nis Venture Trust (together, the Trusts) are shams with
no economic substance, (2) the Trusts are grantor trusts, (3)
under the assignment of income doctrine, petitioners are taxable
on the income and deductions of the Trusts, or (4) if the Trusts
are recognized for tax purposes, sections 652 or 662 function to
increase the gross income of petitioners. Respondent also made
certain resultant adjustments and other adjustments that are not
fully explained.
Pleadings
A separate petition in each of the consolidated cases was
filed on May 21, 1999. None of the petitions fully complied with
our Rules, and, in each case, petitioner (petitioners in the case
of Hae-Rong and Lucy B. Ni) was ordered by the Court to file an
amended petition. In each case, petitioner (or petitioners)
filed an amended petition (together, the amended petitions)
stating the following disagreement, and reasons therefor, with
the adjustments set forth above (and accompanying penalty):
I disagree with all the adjustments and changes the
Commissioner has made. I do not believe that there was
any underlying liability due to a lack of
consideration. I have previously submitted facts with
the Internal Revenue Service “IRS” in support of my
position in an effort to resolve the matter
administratively. The IRS failed or refused to
consider those facts or my good faith effort to resolve
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