- 45 -
Commissioner, 79 T.C. at 720; Markosian v. Commissioner, supra at
1243; Norton v. Commissioner, supra; Lund v. Commissioner, supra.
This factor favors respondent.
C. Economic Interests
The third factor we consider is whether a genuine economic
interest in the trusts passed to anyone other than the Gouveias.
Markosian v. Commissioner, supra at 1243.
1. Pago Trust
Petitioners have not offered any admissible evidence that
identifies the owners or beneficiaries of the Brookes Group or
the ultimate recipient of the funds distributed to its foreign
beneficiary. At trial, counsel for respondent elicited testimony
that shows petitioner possessed the original copy of the Brookes
Group’s certificate for 90 units of beneficial interest in the
Pago Trust. Further, the record is devoid of any credible
evidence that the Brookes Group ever fulfilled its commitment to
advance funds to the Pago Trust to purchase real estate.
It is inconceivable that petitioners would assign to the
trust the steady stream of income from the installment note and
receive only 10 percent of the trust’s distributions in return.27
It is also inconceivable that petitioners, in exchange for
27We are also unpersuaded by petitioner’s testimony that he
transferred his property to the Pago Trust because he needed only
10 percent of the trust’s income to live on, and he thought that
operating the business in trust form would guarantee him a
lifetime of income distributions.
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