Orneal and Martha Kooyers, et al. - Page 25

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          to control beneficial enjoyment of the corpus or income are                 
          vested in the grantor or certain other persons.  Sec. 674.                  
          Fifth, certain administrative powers are exercisable by the                 
          grantor or a nonadverse party.  Sec. 675.                                   
               Adverse party is defined as “any person having a substantial           
          beneficial interest in the trust which would be adversely                   
          affected by the exercise or nonexercise of the power which he               
          possesses respecting the trust.”  Sec. 672(a).  Even if the                 
          section 672 definition of an adverse party is satisfied, however,           
          sections 674-677 require a trust’s income to be taxed to the                
          grantor unless the consent of the adverse party is required                 
          before the grantor may exercise any of the powers enumerated in             
          those sections.  Because petitioners did not hold beneficial                
          interests in the trusts, they were not adverse parties with                 
          respect to each other.  See, e.g., Schulz v. Commissioner, supra            
          at 495-496.                                                                 
               In 1998, the OMK Company Trust paid petitioners’ costs of              
          housing, medical care, travel, and family gatherings.  The OMK              
          Company Trust also paid the education expenses of petitioners’              
          grandchildren, who were not beneficiaries of the OMK trusts.                
          Several factors indicate that petitioners retained total control            
          over the OMK trusts and that the trusts are grantor trusts.                 
          First, none of petitioners’ powers as trustees required the                 
          consent of an adverse party.  Second, petitioners retained                  






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