Zalman Melnik and Lea Melnik - Page 3

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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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