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Petitioners bear the burden of proof in these cases, and it
has not shifted under section 7491(a). Petitioners did not
present credible evidence that the trusts had economic substance,
and the credibility of the evidence that they did produce was
undermined by their implausible claims. Petitioners did not
cooperate with respondent’s examination; in fact, they obstructed
the examination by refusing to produce documents or answer
questions until J.O. and Joey were found in contempt by the
District Court. Sec. 7491(a)(2)(B).
The most implausible of petitioners’ claims is the Haneys’
assertion that the multiple trusts that they established, with
the effect of their reporting minimal tax liability on
substantial profits of the asphalt business, were not tax-
motivated. Petitioners contend that the trusts were established
for “asset protection” purposes. They have never explained,
however, how the multiple trusts gave them more protection
against potential but unnamed creditors than that provided by the
corporate form in which the asphalt business was operating from
1980 through 1996. We are not persuaded that the vague term
“asset protection” contemplates any creditors other than the U.S.
Treasury.
The Haneys reported significant income tax liability on
their 1994 return, filed in October 1995. The next year they met
with Dahlstrom. Attached to their 1996 return was a frivolous
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