Orneal and Martha Kooyers, et al. - Page 27

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          This principle applies regardless of whether the transaction                
          creates an entity with separate existence under State law.  Zmuda           
          v. Commissioner, 79 T.C. at 720.                                            
               Petitioners argue that they did not create the OMK trust to            
          avoid taxes.  We find the testimony of Mr. Kooyers was sincere              
          and credible.  He testified that he and Mrs. Kooyers established            
          the trusts to provide for the continued funding of the missionary           
          activities of P.I. Ministries and for the education of their                
          grandchildren.  Although we are convinced that petitioners                  
          intended to support the missionary activities of P.I.                       
          Ministries,10 the record does not establish that any beneficial             
          interest passed to P.I. Ministries.  The named beneficiaries of             
          the OMK trusts are petitioners’ children and the OMK Charitable             
          Trust.  Documents related to the OMK Charitable Trust are not in            
          the record, however, and the beneficiaries of the OMK Charitable            
          Trust are not identified in the record.                                     
               Courts will disregard a transaction when the transaction has           
          no economic effects other than the creation of tax benefits.                


               10The Department of Justice (DOJ) began a campaign to stop             
          the spread of phony trust schemes that the Government contends              
          are being used illegally to evade the payment of taxes.  In a               
          lawsuit the DOJ filed, the Government obtained a permanent                  
          injunction against Roderick Prescott, a former promoter of NTS,             
          barring him from selling trust schemes that falsely claimed an              
          individual’s personal expenses could be paid through a trust to             
          obtain tax benefits not available to the individual.  United                
          States v. Prescott, Civil No. 02-CV-0692-L (S.D. Cal., June 2,              
          2003).                                                                      





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