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the Prado Road property in the form of management fees and
distributions from the trust.
Comparing the situations before and after the creation of
the Pago Trust, the only discernible differences in petitioner’s
relationship to the Prado Road property and to his real estate
investment activities were that he used the Pago Trust’s bank
account to deposit income and pay expenses generated by the
rental properties, and petitioner received profits from the
rental property in the form of “management fees” and income
distributions. Petitioner admitted at trial that the only
difference between the managerial duties he performed as the
owner of the Prado Road property and the duties he performed
under the maintenance agreement was that he was responsible for
getting the work done, he could not procrastinate, and he kept
better business records. These differences hardly rise to the
level of being material.
We find that the Gouveias’ relationship to the trust
property before and after its transfer to the Pago Trust was not
materially different. See Norton v. Commissioner, supra; Lund v.
Commissioner, T.C. Memo. 2000-334. This factor favors
respondent.
2. McKenzie Trust
With respect to the McKenzie Trust, we likewise conclude
that Mr. Hartmann was merely a straw man in forming the McKenzie
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