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nontaxable items. Respondent also determined that petitioner
received royalty income during the years 1990, 1991, and 1992.
Petitioner does not dispute the existence of the
transactions that produced the income that respondent attributes
to him. Rather, petitioner argues that the income was received
by, and deposited into bank accounts of, valid irrevocable
trusts. Petitioner asserts that respondent has improperly
imputed gross income received by a trust to petitioner and has
improperly failed to recognize the trust as a separate entity.
We note, as a preliminary matter, that petitioner did not provide
copies of any trust agreements, nor did he or his wife testify at
trial.
Section 61(a) provides, in part, that “gross income means
all income from whatever source derived, including (but not
limited to)” compensation for services, gains derived from
dealing in property and royalties. It is fundamental to our
system of taxation that income must be taxed to the one who earns
it. See Commissioner v. Culbertson, 337 U.S. 733, 739-740
(1949); Lucas v. Earl, 281 U.S. 111, 114-115 (1930). Income can
be attributed to an individual when the recipient has total
control or dominion over the funds and uses the funds for
personal purposes. See Davis v. United States, 226 F.2d 331, 334
(6th Cir. 1955); Woods v. Commissioner, T.C. Memo. 1989-611,
affd. without published opinion 929 F.2d 702 (6th Cir. 1991).
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