Harlan D. Edwards and Floors by Harlan, Jody Edwards, Trustee - Page 12

                                       - 12 -                                         
          requirements or made any demands with respect to the manner in              
          which the flooring business was operated.                                   
          On the basis of the record, we find that Harlan’s                           
          relationship to the property transferred to Floors Trust did not            
          differ in any material respect after the transfer.  See Gouveia             
          v. Commissioner, T.C. Memo. 2004-256; Norton v. Commissioner,               
          T.C. Memo. 2002-137.                                                        
               B.  Independent Trustee                                                
               At its creation, the trustees of Floors Trust were Jody and            
          Roland.  On May 1, 1996, Roland purported to resign and appoint             
          Becky as his replacement.  Petitioners admit that the                       
          requirements of the trust instrument were not observed in this              
          purported resignation and replacement.7  Roland’s resignation was           
          not witnessed, and there is no contemporaneous written evidence             
          that Jody approved the appointment of Becky as successor trustee,           
          as required in the trust instrument.  Thus, petitioners were at             
          best somewhat lax with respect to the trust’s formal requirements           
          concerning trustees, and the competent evidence in this case                
          fails to establish unequivocally that Becky was a trustee.  If              
          Roland’s purported resignation and replacement by Becky in 1996             
          were ineffective, then the only duly appointed trustees in 1998             


               7 Petitioners attached to their brief a “memo” in which Jody           
          admits that Roland’s 1996 resignation was not witnessed or                  
          recorded in the trust minutes as required by the trust                      
          instrument.  Further, Jody admits that he failed to sign the                
          purported appointment of Becky in 1996.                                     




Page:  Previous  2  3  4  5  6  7  8  9  10  11  12  13  14  15  16  17  18  19  20  21  Next

Last modified: May 25, 2011