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1998. Therefore, we find that Mr. Jeter was merely a “straw man”
used to form the Pago Trust and that petitioner was, in
substance, its true grantor. See Zmuda v. Commissioner, supra at
720-721; Buckmaster v. Commissioner, supra.
Petitioner’s relationship to the Prado Road property
remained essentially unchanged, and petitioner conducted his real
estate investment affairs in the same manner, both before and
after the Pago Trust was formed. Before 1995, petitioner
purchased the unimproved Prado Road property, managed all aspects
of renting and maintaining the industrial facility he had
developed on the property, and collected all of the profits
attributable to the property. After 1995 when petitioner
transferred the Prado Road property to the Pago Trust, petitioner
continued to manage the property under the pretext of the
maintenance agreement. Through his payment of the Pago Trust’s
monthly expenses using the trust’s bank account, petitioner also
maintained access to the income that the Pago Trust received from
the installment note and could use those funds to further the
real estate investments he made through the trust. Petitioner
continued to deal in real estate by selecting the Cross Street
property for the Pago Trust to purchase, arranging for financing,
developing the property into another industrial facility, and
managing it under a contract with the trust. Further, petitioner
continued to receive a significant portion of the profits from
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