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II. Ownership of a Portion of the Trust Under Grantor Trust
Rules
Petitioners argue that petitioner is the owner of a portion
of the trust under the grantor trust rules and should therefore
be allowed to deduct the value of the conservation easements the
trust contributed to charity. We agree that petitioner is the
owner of the income portion of the trust, but we do not find that
petitioner is the owner of the corpus portion. Moreover,
petitioners have not proven that the charitable contribution was
made from the income portion of the trust, and petitioners are
thus not entitled to the deduction. We consider each of these
issues in turn.
A. Treating Petitioner as Owner of the Income Portion of
the Trust Under Grantor Trust Rules
A person is treated as the owner of any portion of a trust
with respect to which that person has the power, solely
exercisable by himself or herself, to vest the corpus or the
income in himself or herself. Sec. 678; Mallinckrodt v. Nunan,
146 F.2d 1 (8th Cir. 1945), affg. 2 T.C. 1128 (1943). When a
person is treated as the owner of a portion of a trust under
section 678, special rules apply to not tax the trust directly.
Secs. 671-678; Estate of O’Connor v. Commissioner, 69 T.C. 165,
174 (1977). Instead, the person treated as the owner takes into
account the trust’s items of income, deduction, and credit
attributable to that portion of the trust. Sec. 671.
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