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power and control over Alexion Trust’s receipt of income that
such income should not be taxed to them. See Barmes v.
Commissioner, supra. They also have failed to prove that Alexion
Trust should not be disregarded as a sham, since the transfer in
trust lacked economic substance. See discussion of relevant
factors, sec. II.A.3.a.(2) supra, as set forth in Muhich v.
Commissioner, supra. Finally, they have failed to prove that one
or both of them should not be treated as the owner of all or a
portion of Alexion Trust on account of application of one or more
of the grantor trust rules found in sections 673 through 676.
Accordingly, we find that, during 1995, one or both of the
J. Shirleys earned gross income in the amount of $179,791, from
providing computer consulting services, which income, in the
amount of $166,042, the J. Shirleys failed to include in gross
income.
b. Deductions
On brief, the J. Shirleys argue that they should be allowed
deductions, totaling $78,260, claimed by Alexion Trust in
computing its net profit from computer consulting of $101,531.
Respondent denied those deductions to Alexion Trust on various
grounds, including Alexion Trust’s failure to establish that the
underlying expenses were deductible under section 162, which
allows a deduction for all ordinary and necessary expenses paid
or incurred during the taxable year in carrying on any trade or
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