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used the McKenzie Trust’s bank account for all of his business
transactions, and the profits he retained from the business were
disguised as management fees.
We find that the Gouveias’ use of the trust property before
and after its transfer to the McKenzie Trust was not materially
different. See Castro v. Commissioner, T.C. Memo. 2001-115;
Buckmaster v. Commissioner, supra. This factor favors
respondent.
B. Independent Trustee
The second factor we consider is whether the trust had a
bona fide independent trustee. Markosian v. Commissioner, 73
T.C. at 1243-1244. Whether the nominal trustee had any
meaningful role in the operation of the trust or exercised any
control over the trust is significant to our consideration of
this factor. See Zmuda v. Commissioner, supra at 720; Norton v.
Commissioner, T.C. Memo. 2002-137; Lund v. Commissioner, supra.
1. Pago Trust
The only act Mr. Norton performed as trustee of the Pago
Trust was to sign various trust documents, such as the trust’s
declaration and indenture, the checks drawn on the trust’s
account, and the trust’s income tax returns. Mr. Norton
understood that the trust served as a business organization
formed to hold the real estate petitioner intended to develop and
that paying the trust’s bills would be the only duty required of
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