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Careys’ failure to call Mr. Carpa is that his testimony would
have been negative to Michael. See Wichita Terminal Elevator Co.
v. Commissioner, 6 T.C. 1158, 1165 (1946) (“the failure of a
party to introduce evidence within his possession and which, if
true, would be favorable to him, gives rise to the presumption
that if produced it would be unfavorable”), affd. 162 F.2d 513
(10th Cir. 1947); see also United States v. Tory, 52 F.3d 207,
211 (9th Cir. 1995) (similar). We, find, therefore, that Michael
did control the trust’s operations.
We also draw negative inferences from the Careys’ failure to
identify the beneficiary (or beneficiaries) of Contract
Administrators Trust, the claimed settlor of the trust, and the
interest (or interests) behind Shasta Enterprises, the claimed
beneficiary of the trust. Mr. Carpa would also seem a likely
witness on those issues (as would representatives of Contract
Adminstrators Trust and Shasta Enterprises). We infer from the
Careys’ failure to call Mr. Carpa or another knowledgeable
witness to testify on those issues that any such testimony would
have been negative to Michael, i.e., that any witness would have
testified that Michael, or Michael and Leone, transferred
property to the trust and benefited from it, and we so find.
If Michael had sufficient power and control over the trust’s
receipt of income, then that income would be taxable to him. See
Barmes v. Commissioner, supra. The Careys have failed to prove
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