-4-
of PERJ Trust. They stated further that PERJ Trust is revocable
at their discretion.
On July 25, 1995, petitioners signed a “Uniform Residential
Loan Application”. In the loan application, Mr. Nichols stated
that he had been self-employed for 19 years as the owner-operator
of a sweeping business doing business as Clean Sweep Maintenance.
Petitioners also listed their personal checking and savings
accounts. Those same accounts were the bank accounts of CSM
Trust, JREP Trust, and PERJ Trust. During 1997 and 1998,
petitioners were the only persons who had signatory authority
over those bank accounts.
CSM Trust filed partnership returns for 1997 and 1998.3
PERJ Trust was indicated as a partner holding a 99-percent profit
interest in CSM Trust, and Ms. Nichols was said to be a partner
holding a 1-percent profit interest in CSM Trust. Those returns
were filed under the same employer identification number as had
been used on the trust income tax returns filed in the name of
CSM Trust for taxable years before 1997.
On their 1997 and 1998 Federal income tax returns,
petitioners understated their interest income by $25 and $45,
respectively. Petitioners also did not report Social Security
3 The record does not indicate why CSM Trust filed
partnership returns for those years.
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Last modified: May 25, 2011