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The combination of these factors and the apparent lack of
any substantive trust purpose other than tax avoidance compels a
finding that Lucky Kirt Trust shall be disregarded for Federal
income tax purposes. See Markosian v. Commissioner, 73 T.C. at
1244-1245. Therefore, petitioners will be taxed on the income
attributed to Lucky Kirt Trust. See sec. 61(a).
IV. Self-Employment Tax
Section 1401 imposes, in addition to other taxes, a tax on
the self-employment income of every individual. Subject to
exclusions not applicable in the instant case, “self-employment
income” refers to the “net earnings from self-employment derived
by an individual”. Sec. 1402(b). Section 1402(a) defines “net
earnings from self-employment” as “the gross income derived by an
individual from any trade or business carried on by such
individual, less the [claimed] deductions [in the year in issue]
allowed by this subtitle which are attributable to such trade or
business”.
The burden of proof to show that respondent’s determination
was in error remains with petitioners. They offered no evidence
and advanced no arguments with respect to liability for self-
employment taxes. The burden does not shift to respondent under
section 7491.
Petitioners farmed the land held in the Lucky Kirt Trust and
assigned their income from farming activities to the trust.
Because we have determined that Lucky Kirt Trust is a sham trust,
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