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(2) whether, in the alternative, petitioners carried their
burden of proving that the income from petitioners’ respective
trusts is not attributable to petitioners under the grantor trust
rules; and
(3) whether petitioners are liable for the section 6662(a)
accuracy-related penalties determined by respondent.
FINDINGS OF FACT
Some of the facts have been stipulated and are so found. We
incorporate the stipulated facts into our findings by this
reference.
Background
Zalman Melnik and Lea Melnik (Lea) were married and resided
in Houston, Texas, when they filed their petition. Moshe Melnik
also resided in Houston, Texas, when he filed his petition.
Hereinafter, we refer to these consolidated cases as this case.
Zalman and Moshe Melnik3 (the Melniks) are brothers who grew
up in Israel. In 1974, Moshe Melnik moved to Canada, where he
attended college and received a degree in mechanical engineering.
Moshe Melnik then worked in Canada as an engineer for a scrap
metal company before moving to the United States in 1978 or 1979.
In 1979, Moshe Melnik and his wife at the time, Barbara
Melnik, formed HouTex, a scrap metal dealer involved in the
3Petitioner Moshe Melnik is sometimes referred to as “Mike
Melnik”, and petitioner Zalman Melnik is sometimes referred to as
“Sol Melnik” in the record in this case.
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