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Commissioner, supra at 1243. In considering this factor, we look
to the economic realities of the arrangement to ascertain the
true grantor of the trust, regardless of who is named as grantor
in the declaration of trust. Zmuda v. Commissioner, supra at
720-721; Stern v. Commissioner, 77 T.C. 614, 647 (1981);
Buckmaster v. Commissioner, supra.
1. Pago Trust
Although Mr. Jeter was the nominal grantor, petitioner
clearly initiated the establishment of the Pago Trust.
Petitioner solicited Mr. Jeter’s assistance in signing the trust
documents, aware of the fact that Mr. Jeter had no prior
experience with trusts, and chose Mr. Norton to serve as trustee.
At petitioner’s direction, Mr. Jeter appointed Mr. Norton to act
as the trustee, having previously met Mr. Norton only once. Mr.
Jeter testified that he understood that once he signed the trust
documents and appointed a trustee, he would play no role in the
management or operation of the trust. According to Mr. Jeter, he
was “helping out a friend”, and since he knew nothing about
trusts, he simply followed petitioner’s orders. Further, Mr.
Jeter knew nothing about the Pago Trust’s business, except that
the trust was “some form of a tax shelter”.
In addition, only petitioner contributed property to the
trust, and the installment note, promissory notes, and the Prado
Road property were the only assets held by the Pago Trust until
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