Larry J. and Anita L. Lundgren - Page 17

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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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