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tenants in common”. By grant deed dated November 11, 1992 (the
second grant deed), petitioners (in the same capacity as in the
first grant deed) transferred the residence to Kevin R. Richards
and David J. Snyder, as trustees for J&R Trust. The second grant
deed was recorded on August 12, 1993. Between the dates of
execution and recordation of the second grant deed, by deed of
trust dated June 15, 1993, and recorded June 23, 1993,
petitioners, as “husband and wife”, encumbered the residence to
secure their indebtedness to United Savings Bank in the amount of
$141,300.
Respondent’s Adjustments
Attached to the notice are statements listing and explaining
respondent’s adjustments to petitioners’ income. Among the
adjustments listed are the following, involving respondent’s
attribution to petitioners of income from Complete Connections
Trust and J&R Trust:
Trust 1992 1993 1994 1995
Comp. Conn. $194,205 $229,625 $214,738 $295,903
J&R -- 11,766 15,334 9,042
In the case of both trusts, respondent explains the adjustments
as resulting from, alternatively, (1) respondent’s disregard of
the trust, since it “is a sham with no economic substance”,
(2) the status of the trust as a grantor trust, (3) application
of the assignment of income doctrine (pursuant to which income is
taxed to the true earner of that income), and (4) application of
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