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present in the office; David routinely signed Arthur’s name; and
Arthur, who was in his seventies during the years in issue, was
unable to manage Demetree and Associates. In the alternative,
respondent contends that the amounts petitioners received from
Demetree and Associates were compensation for services. We
disagree.
David did not control Demetree and Associates. See Crowley
v. Commissioner, 34 T.C. 333, 345 (1960) (holding that business
income is taxable to the person who owns and controls the
business). Petitioners, both of whom were credible witnesses,
testified that, while Deborah worked, David performed domestic
duties and was a full-time care provider to their five children.
David merely assisted Arthur, who made the major business
decisions. Arthur successfully ran Demetree and Associates for
more than 10 years before David began assisting him, he continued
to report the business income on his returns, and he was listed
as the owner or broker on the leases and sales agreements. The
only contrary evidence was the testimony of Ms. Lloyd, who was
not credible. Finally, the facts that David signed Arthur’s name
using a power of attorney and Arthur was in his seventies during
the years in issue are of little significance.
Nor are we persuaded that the amounts that David received
from Demetree and Associates were compensation for services
rendered. Instead, the testimony and documentary evidence
establish that Arthur and Naomi made gifts and loans from
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