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In this case, there are multiple factual issues relevant to
determining petitioners’ tax liability. Petitioners have not
addressed or provided any evidence concerning $61 of interest
income or substantiated expenses claimed by the OMK trusts.
Consequently, section 7491(a)(2) does not place on respondent the
burden of proving those factual issues. The resolution of the
remaining issues does not depend on which party has the burden of
proof. We resolve those issues on the preponderance of the
evidence in the record.
I. Income of the OMK Trusts Is Taxable to Petitioners
Respondent determined that the OMK trusts should be
disregarded for Federal income tax purposes and the income
reported by the trusts taxed to petitioners.
Courts have consistently invalidated similar trusts for
Federal income tax purposes. Those courts that have been faced
with the issue have been uniform in their determinations that
those entities will not allow a taxpayer to shift the incidence
of taxation away from himself to the trust. We cite only a few
of the many cases so holding. See, e.g., Zmuda v. Commissioner,
731 F.2d 1417 (9th Cir. 1984), affg. 79 T.C. 714 (1982); Holman
v. United States, 728 F.2d 462 (10th Cir. 1984); O’Donnell v.
Commissioner, 726 F.2d 679 (11th Cir. 1984); Hanson v.
Commissioner, 696 F.2d 1232 (9th Cir. 1983), affg. T.C. Memo.
1981-675; Schulz v. Commissioner, 686 F.2d 490 (7th Cir. 1982),
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