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party” within the meaning of that term (e.g., she had no
beneficial interest in the voting trust), we conclude that
Textron was entitled to income of the trust without the approval
or consent of an adverse party. Accordingly, we hold that the
voting trust is properly classified as a grantor trust.4
The consequence of classifying the voting trust as a grantor
trust is that Textron is considered to be the owner of the trust.
As such, Textron, and not the voting trust, must include the
trust’s Avdel subpart F income in its (Textron’s) gross income.
Sec. 671. We disagree with petitioner that subpart E was not
meant to apply to the facts at hand. We do not find in the text
or policy of the applicable statutes an exception that would
insulate petitioner from taxation.
We hold that the subpart F income attributable to the
ownership of the Avdel shares is properly includable in Textron’s
income by virtue of the combined operation of subpart F (which
requires inclusion of that income in the voting trust’s income)
4 The fact that Textron could not vote the Avdel shares is
of no concern to us for purposes of sec. 677.
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