- 16 -
Denali Lands Trust and the Denali Company Trust lacked economic
substance and are shams for tax purposes.
A. Did the Taxpayer’s Relationship, as Grantor to the
Property, Differ Materially Before and After the
Formation of the Trusts?
We find that Mr. and Mrs. Norton’s relationship, as grantors
to the property, did not differ materially before and after the
formation of the trusts.7
Before the formation of the trusts, Mr. Norton operated SNE
as a sole proprietorship. Mr. Norton testified that, after the
formation of the trusts, his day-to-day conduct of SNE was the
same as before the formation of the trusts. Additionally, with
regard to the Denali Company Trust, the trustees approved a
resolution that allowed Mr. Norton to “lend” his name,
reputation, goodwill, good credit standing, licenses, and
authorizations to the Denali Company Trust. In essence, the
Denali Company Trust was SNE and operated as such. Further, the
Denali Company Trust would transfer its funds to SNE’s business
account that would allow Mr. Norton to sign checks in order to
pay bills and purchase items for business and personal use. Mr.
Norton still had access to SNE’s funds, even after SNE’s assets
were transferred to the Denali Company Trust.
7 Mr. and Mrs. Norton are listed as the grantors on the
South Denali Lands Trust. Crystal Diversified Trust is listed as
the grantor of the Denali Company Trust. The parties stipulated
that Mr. and Mrs. Norton are the grantors of the Denali Company
Trust.
Page: Previous 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 NextLast modified: May 25, 2011