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Paragraph 4 of the petition, which sets forth the bases on
which the notice of deficiency is challenged, alleges as follows:
(1) Business trust are an acceptable business entity
according to Reg. 301.7701.4(b). (2) Business trust
has a business purpose for profit. * * * (3) Supreme Ct
has upheld that income cannot be directed to another
entity or person if the income can only properly belong
only to the entity it was intended. Lucas vs. Earl 281
US 111 (1930)[5]
C. Respondent’s Motion
Respondent filed a motion to dismiss for lack of
jurisdiction. In the motion, respondent asserts that this case
should be dismissed for lack of jurisdiction because “the
petition in the instant case was not brought by a party with
proper capacity”. Respondent further contends:
Upon commencement of the examination of
petitioner’s 1998 taxable year, respondent requested a
copy of the complete trust documents for petitioner.
Petitioner failed to cooperate with respondent and
provide the documents requested during the examination
of this case.
To date [July 22, 2002], petitioner has not
provided respondent with trust documents which
establish the chain of trusteeship from the creation of
the trust until the time the petition was filed.
5 A business trust (commonly known as a “Massachusetts
trust”) is an unincorporated business organization created by a
declaration of trust wherein property is conveyed to a trustee to
hold and manage for the benefit and profit of such persons as may
be or become the holders of transferable certificates evidencing
the beneficial interests in the trust estate. State St. Trust
Co. v. Hall, 41 N.E.2d 30, 34 (Mass. 1942). See generally Hynes
v. Commissioner, 74 T.C. 1266 (1980), and cases cited therein for
a discussion on business trusts. The purpose of a business trust
is to carry on a business or commercial activity for profit. Id.
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Last modified: May 25, 2011