-9-
T.C. 1235, 1244-1245 (1980). This is so even if the trust was
formed and had a separate existence under local law. Zmuda v.
Commissioner, 79 T.C. 714, 720 (1982), affd. 731 F.2d 1417 (9th
Cir. 1984).
Petitioners never introduced a scintilla of evidence which
would disprove respondent’s determinations that the trusts are
shams. In fact, petitioners failed to establish the very
existence of the trusts. Petitioners unsuccessfully attempted to
prove the existence of the trusts by Forms 1041, U.S. Income Tax
Return for Estates and Trusts, filed with respondent. Those
forms do not persuade us that the trusts indicated in the forms
actually existed. Petitioners have failed to introduce into
evidence any document establishing the terms of the trusts, nor
have they obtained the testimony of James A. Nichols, who is
described on the trust returns as trustee. Petitioners were made
aware of the need for the trust documents during the examination
of their returns for the years in issue and during discovery.
They have not demonstrated that they lacked access to those
documents, nor have they shown that James A. Nichols is
unavailable to testify. We infer from petitioners’ failure to
produce such evidence that either it does not exist or, if it
does exist, it would be negative to petitioners. McKay v.
Commissioner, 886 F.2d 1237, 1238 (9th Cir. 1989), affg. 89 T.C.
1063 (1987); Wichita Terminal Elevator Co. v. Commissioner, 6
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