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Using funds from Arivada’s account in the amount of
$31,198.16, petitioner purchased a home on Ludlow Drive in
Scottsdale, Arizona. Petitioner purchased the home in the name
of the woman with whom he was then romantically involved to avoid
holding property that would be subject to the claims of his
creditors, including the Internal Revenue Service (IRS).
Holistic Osteopathic Medical Care, PLLC (HOMC), was formed
on June 7, 1994, as a professional limited liability company
under Arizona law. HOMC was a member-managed LLC, and petitioner
was the manager. Petitioner was the sole patient care provider
for HOMC during 1996 and 1997. During 1996 and 1997, the gross
receipts for petitioner’s medical practice were deposited into
accounts in the name of HOMC.
HOMC filed partnership income tax returns, Form 1065, U.S.
Partnership Return of Income, for each of the years 1994 through
1997. On Forms K-1, Partner’s Share of Income, Credits,
Deductions, etc., attached to HOMC’s returns for 1996 and 1997,
petitioner was reported as a partner with a 10-percent ownership
interest and Arivada was reported as a partner with a 90-percent
ownership interest.
For reasons set forth in T.C. Memo. 1999-381, Arivada is not
a trust recognized for Federal income tax purposes. The purpose
for the transfer of property to the trust was tax avoidance, and
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