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The only restriction that the trust placed on Mr. Norton’s
decisions with regard to SNE was that he was required to obtain
authorization from Mr. Owens on large projects. During trial,
Mr. Owens testified that he would not require or demand that SNE
operate in a certain fashion but would merely provide advice.
Mr. Owens did not forbid Mr. Norton from doing any activities
with SNE. We find that the authorization on large projects for
SNE did not effect a material change in Mr. Norton’s relationship
to and control of the business or assets of SNE.
B. Did the Trust Have an Independent Trustee?
On the basis of the record, we find that Mr. Owens and Mr.
Crockett were not independent trustees and that they did not
perform any significant duties or exercise any significant
control or power over the trusts. The failure of a nominal
trustee to have any meaningful role in the operation of the trust
has been repeatedly cited by this Court as evidence that the
entity lacks economic substance. See, e.g., Zmuda v.
Commissioner, 79 T.C. at 720; Para Techs. Trust v. Commissioner,
T.C. Memo. 1994-366, affd. without published opinion sub nom.
Anderson v. Commissioner, 106 F.3d 406 (9th Cir. 1997).
First, Mr. Norton exercised control over the trustees
through his brother, David Norton, who was the protector of the
trusts. David Norton would consult Mr. Norton with regard to
replacing the trustees. For example, if Mr. Norton disagreed
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