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and, if the trust was terminated, the assets were also to be
distributed according to the beneficial interest certificates.
The trustees were empowered to pay compensation to officers,
employees, and agents of the trusts, including themselves. The
term of each trust usually was 25 years unless the trustees
unanimously decided on an earlier termination date. As trustees,
the taxpayers retained almost unlimited discretionary powers to
deal with the trust assets, distribute income, and terminate the
trust. The husbands and wives continued to use and enjoy the
property that had been conveyed and/or leased to their trusts.
Generally, the courts have disregarded these trusts for
Federal income tax purposes. There are four grounds courts have
used to disregard a trust. First, the trust was created as a
guise for deducting personal consumption expenses. Second, the
income of the trust is taxable to the taxpayer under the
assignment of income doctrine. Third, the trust is a grantor
trust under the provisions of sections 671 through 677. Fourth,
the trust lacks substance. See, e.g., Zmuda v. Commissioner,
supra; Holman v. United States, supra; O’Donnell v. Commissioner,
supra; Hanson v. Commissioner, supra; Schulz v. Commissioner,
supra; Vnuk v. Commissioner, supra; Wesenberg v. Commissioner,
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