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did nothing to alter the substance of the Castros’ relationship
to the jewelry business or to the other trust assets.
Under the terms of the declarations of trust, a majority of
the trustees controlled many trust decisions, and the Castros
constituted a majority of the trustees. As a result, no
independent trustee could wrest control over trust property from
the Castros or prevent the Castros from using the trust property
for their own purposes. See Buckmaster v. Commissioner, supra.
The Castros had the ability to fully control the trusts’
activities for their own benefit because no independent trustee
had any meaningful control over the management of either trust.
This is evidence that the trusts lacked economic substance. See
Zmuda v. Commissioner, 79 T.C. at 720-721; Lund v. Commissioner,
T.C. Memo. 2000-334. This factor weighs against petitioners.
C. Economic Interests
The third factor we consider is whether a genuine economic
interest in the trusts passed to anyone other than the Castros.
See Markosian v. Commissioner, 73 T.C. at 1244. Petitioner
asserted at trial that the Castros’ children, the Castro Holding
Co., and Good Samaritan, a private charitable trust, were the
CFT’s beneficiaries. Petitioners asserted on brief that all 100
units of beneficial interest in the CFT originally issued to
petitioner were later canceled by the CFT and ultimately reissued
to other parties.
The objective evidence does not show that anyone other than
petitioner held any meaningful economic interest in either trust.
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