- 14 -
v. Commissioner, supra at 720; Para Techs. Trust v. Commissioner,
T.C. Memo. 1994-366 (and cases cited therein), affd. without
published opinion sub nom. Anderson v. Commissioner, 106 F.3d 406
(9th Cir. 1997).
C. Transfer of Economic Interest to Beneficiaries Other
Than Grantor
The third factor we consider is whether a genuine economic
interest in Floors Trust passed to anyone other than Harlan.
Markosian v. Commissioner, 73 T.C. at 1243.
According to the trust instrument of Floors Trust, Jody held
94 of 100 units of beneficial interest, Harwood Holding and
Harwood Group each held 2 units, and Harlan held the remaining 2
units. Notwithstanding this formal allocation of the beneficial
interests, Floors Trust’s Schedule K-1 for 1998 reports that Jody
received no distributions while Harlan and Harwood Group received
distributions of $3,979 and $5,000, respectively.
Petitioners argue that the distribution to Harwood Group
evidences that a genuine economic interest passed to
beneficiaries other than Harlan because Harwood Group’s
beneficiaries consisted not only of Harlan but also of Jody and
Greg. However, given that Harwood Group’s principal assets were
Harlan’s residence and assorted household furnishings, we are
persuaded that Harwood Group was a mere intermediary for passing
economic benefit to Harlan. Cf. Norton v. Commissioner, supra
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