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(3) whether Floors Trust is entitled to deductions taken for
rent, income tax expense, and income distributions;
(4) whether Harlan is liable for self-employment tax;
(5) whether Harlan is liable for an addition to tax pursuant
to section 6651(a)(1); and
(6) whether Harlan is liable for an addition to tax pursuant
to section 6654.
FINDINGS OF FACT
The parties have stipulated some of the facts, which are
incorporated herein by reference. Harlan resided and Floors
Trust had an address in San Jose, California, at the time the
petition was filed.
Before 1995, Harlan operated a vinyl floor installation
business, known as Edwards Vinyl Floors (Edwards Vinyl), as a
sole proprietorship. Harlan managed the business, owned its
assets, and performed the installation work along with his son,
Jody Edwards (Jody).
In January 1995, Harlan was the grantor of three trusts:2
Floors Trust, Harwood Group Trust (Harwood Group), and Harwood
Holding Co. Trust (Harwood Holding).
Harlan got the idea of putting his business and assets into
trusts through the advice of Don Fletcher, a trust promoter who
2 By use of the terms “trust”, “trustee”, “beneficiary”, and
other related terms, we intend no implication as to the validity
of the trusts involved in this case.
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