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142(a); sec. I. supra. They must prove facts establishing that
Alexion Trust is neither a sham, a grantor trust, nor that the
income of Alexion Trust is taxable to Joseph and Frances Shirley
under assignment of income principles. They must prove facts
establishing that they are entitled to the depreciation deduction
claimed with respect to property of Caralan Trust. They have
done neither.
3. Discussion
a. Alexion Trust Gross Receipts
(1) Introduction
Alexion Trust was created by the J. Shirleys on September 1,
1994. The J. Shirleys exercised control over the Alexion Trust,
as evidenced by their signatory authority over the trust’s bank
accounts (out of which they paid their personal expenses) and
Joseph Shirley’s signature on the Alexion Trust 1995 return as
fiduciary. Alexion Trust reported gross receipts for 1995 of
$179,791 from an activity described as computer consulting. One
or both of the J. Shirleys performed all or substantially all of
the consulting services generating such receipts. They reported
no income on account of performing such services, and Alexion
Trust claimed no deduction for wages paid. Prior to 1995, one or
both of the J. Shirleys engaged in the computer consulting
business, paying self-employment tax on the net profits of the
business. Those facts are sufficient for us to find that the J.
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