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The record before us establishes that throughout 1995,
including the period after the creation of Sandbar Wholesale
Trust, petitioners operated, controlled the operations of, and
controlled Barbara’s Gift Shop and Barmes Wholesale. On that
record, we find that throughout 1995 petitioners controlled the
earning of the income of those two businesses. Consequently,
regardless of whether petitioners transferred the two businesses
and/or the properties of those businesses to Sandbar Wholesale
Trust after it was created, on the instant record, petitioners
are taxable under the assignment of income doctrine on the
unreported 1995 Schedule C gross receipts at issue in this case.
See Lucas v. Earl, 281 U.S. 111 (1930).
The “first principle of income taxation” is that income must
38(...continued)
obtained from that office. That document contained, inter alia,
the following statement: “Trustee(s) have * * * acknowledged the
conveyance, delivery and acceptance of certain * * * property
listed in Schedule A and Addendum to be held in Trust according
to the terms, herein.” The record does not contain the Schedule
A and Addendum to which the document in question referred. Nor
does the record contain any other documents evidencing any
alleged conveyance to Sandbar Wholesale Trust or any other trust
documents relating to that trust. During respondent’s examina-
tion of petitioners’ 1995 joint return, petitioners did not
provide respondent’s revenue agent with any trust documents
relating to Sandbar Wholesale Trust. During the discovery
process in this case, petitioners refused to comply with the
Court’s October 13, 2000 Order compelling petitioners to produce
to counsel for respondent, inter alia, any trust documents
relating to Sandbar Wholesale Trust that respondent requested in
respondent’s request for production of documents. During the
trial in this case, petitioners did not offer any such documents
into the record.
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