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documents. When petitioner did agree to meet with respondent,
petitioner did not effectively engage in meaningful preparation
of his case for trial as required by this Court’s Rules and
pretrial order. Respondent points out that, in general,
petitioner was uncooperative and failed to comply with the letter
or the spirit of this Court’s Rules or its pretrial order.
Petitioner assigned his income-generating activities to
trusts or other entities by means of transactions that respondent
determined lacked economic substance.2 The notices of
deficiency, among other adjustments and explanations, contain the
following explanatory paragraphs concerning petitioner’s business
income and his relationship to the trusts:
Since the trust arrangement is a sham with no economic
substance, it is disregarded for tax purposes. Your
business income is increased by the gross receipts of
the Photo Art Marketing enterprises Trust and Photo Art
Publishing Trust and decreased by the ordinary and
necessary expenses of carrying on those business[es].
* * *
Alternatively, your business income is increased
because the Photo Art Marketing enterprise Trust and
the Photo Art Publishing Trust are grantor trusts whose
incomes are taxable to you individually. * * *
* * * * * * *
2 Petitioner has chosen to attack the Commissioner’s and
this Court’s jurisdiction to delve into his relationship with his
trust and has adduced no evidence to show that the substance of
the Government’s determination is in error. Petitioner admits,
in response to respondent’s request for admissions, that he
transferred his business to the trust(s).
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Last modified: May 25, 2011