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his family. The duplex provides rental income. The term of the
trust is 20 years. The trustees are Mr. Owens and Mr. Crockett.
Both trustees and the Finger Lake Holding Trust are signatories
on the bank account for the trust. The protector of the trust is
David Norton. The beneficiary of this trust is the Finger Lake
Holding Trust. Mr. Norton serves as general manager of the
trust. As manager, Mr. Norton would handle the daily activities
of the trust. Mr. Norton’s responsibilities did not change with
regard to these daily activities because of the South Denali
Lands Trust.
The South Denali Lands Trust tax return for 1994 was
received by respondent on January 4, 1996. The tax return
reported no taxable income. In the notice of deficiency to the
South Denali Lands Trust, respondent disallowed a depreciation
deduction in 1994 because it failed to establish the basis of the
property claimed to have been used in the business, thereby
increasing the net rental income. Additionally, respondent
imposed an addition to tax under section 6651(a)(1) for failure
to file and an accuracy-related penalty under section 6662(a).
Respondent received Mr. and Mrs. Norton’s 1994 tax return on
January 3, 1996. The tax return did not report any rental income
from the South Denali Lands Trust. In the notice of deficiency
to Mr. and Mrs. Norton, respondent increased their income to
account for the rental income from the South Denali Lands Trust.
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Last modified: May 25, 2011