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Knetsch v. United States, 364 U.S. 361, 365-366 (1960).
Furthermore, even if a transaction has economic effects, it must
be disregarded if it has no business purpose and its motive is
tax avoidance. Gregory v. Helvering, supra at 469; Neely v.
United States, 775 F.2d 1092, 1094 (9th Cir. 1985).
In deciding whether a purported trust lacks economic
substance, we consider the following factors: (1) Whether the
taxpayer’s relationship, as grantor, to property purportedly
transferred into trust differed materially before and after the
trust’s formation; (2) whether the trust had a bona fide
independent trustee; (3) whether an economic interest in the
trust passed to trust beneficiaries other than the grantor; and
(4) whether the taxpayer honored restrictions imposed by the
trust or by the law of trusts. Markosian v. Commissioner, supra
at 1243-1245; Castro v. Commissioner, T.C. Memo. 2001-115; Hanson
v. Commissioner, T.C. Memo. 1981-675, affd. per curiam 696 F.2d
1232 (9th Cir. 1983).
The first factor we consider in deciding whether a trust has
economic substance is whether a taxpayer’s relationship, as
grantor, to the property transferred into trust differed
materially before and after the trust’s formation. Markosian v.
Commissioner, supra at 1243.
The record makes clear that petitioners’ relationship, as
grantors, to their property before they created the OMK trusts
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