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Trust accounts. Petitioner and his wife had signatory authority
over both Dollar Savings and Trust accounts.
We find that the $8,800 was earned by petitioner and then
funneled through the various accounts as part of petitioner’s
overall plan to conceal income. Once we view through the layers
of nominee accounts through which the funds were channeled,
petitioner remained in control of the funds.
B. Royalty Income
A fundamental principle of income tax law is that economic
substance prevails over form. See Gregory v. Helvering, 293 U.S.
465 (1935). “When the form of the transaction has not, in fact,
altered any cognizable economic relationships, we will look
through that form and apply the tax law according to the
substance of the transaction.” Zmuda v. Commissioner, 79 T.C.
714, 720 (1982), affd. 731 F.2d 1417 (9th Cir. 1984). This rule
applies regardless of whether the entity has a separate existence
recognized under State law and whether, in form, it is a trust, a
common-law business trust, or some other form of jural entity.
See id.
We find the various transactions which purported to result
in a transfer of petitioner’s interest in the 5501 and 5955
properties and his royalty interest in those properties to be
without economic substance. Petitioner always remained in
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