- 19 -
Prior to the creation of the trust arrangements,
the Haneys were grooming their son, Joey Haney, to
assume control of the family-run asphalt business.
After the creation of AMC, the Haneys were still active
in the asphalt business. Eventually, Petitioner-
husband [J.O.] retired but Petitioner-wife [Patricia]
remained active. The asphalt business retained the
same employees and operated in the same manner as prior
to the creation of the trusts.
AMC used trust units instead of J&J corporate
shares. They continued to use the same name, Asphalt
Maintenance Company of Texas, to do business using the
same assets. They reported the equipment and business
real property assets supposedly transferred to the
trusts on AMC’s financial statements. J&J and AMC used
the same equipment and real property in the asphalt
business.
We agree with respondent. The only instances cited by
petitioners of “differences” with respect to the asphalt business
are differences of form created by the trusts. Thus their
reasoning is circular. They have shown no material difference in
the manner in which the business was operated or the assets were
used before and after creation of the trusts. See Sparkman v.
Commissioner, supra; Edwards v. Commissioner, supra; Gouveia v.
Commissioner, supra; Castro v. Commissioner, T.C. Memo. 2001-115.
Transfer of Economic Interest
Petitioners’ position is that the earnings of the asphalt
business operated by AMC Trust are not taxable because they were
transferred to Oliver & Co., allegedly a “charitable remainder
trust”. This rationale is used by petitioners to explain why
neither AMC Trust nor Oliver & Co., nor any of the other trusts,
ever reported any taxable income or paid any Federal income
Page: Previous 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 NextLast modified: May 25, 2011