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payments to begin in the year 2017, would transfer their
profitable rental real estate into a trust that was required to
pay 90 percent of its income to the Brookes Group. See Castro v.
Commissioner, T.C. Memo. 2001-115; Buckmaster v. Commissioner,
T.C. Memo. 1997-236. Petitioners have not introduced any
evidence that the Brookes Group was anything more than an
intermediary designed to move money offshore.
On these facts, we conclude that petitioners have failed to
prove that any economic interest passed to any other
beneficiaries. See Markosian v. Commissioner, 73 T.C. at 1244.
This factor weighs against petitioners.
2. McKenzie Trust
Petitioners failed to produce any admissible evidence that
identifies the owners or beneficiaries of Glenmere Investments,
the purported 100-percent beneficiary of the McKenzie Trust, and
petitioners have not offered any credible evidence that Glenmere
Investments ever received any distributions from the trust. In
fact, the certificate for 100 units of beneficial interest was
never actually issued to Glenmere Investments. Further, in 1996,
the trust paid more than half of its profits from the automobile
restoration business to petitioner in management fees, and in
1997 and presumably in 1998, petitioner’s management fees
exceeded the trust’s business profits, leaving no income to
distribute.
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