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The resulting record reeks of self-interest and is riddled with
imprecision and inconsistencies that petitioners do not explain.
The record fails to establish the dates when certain relevant
events took place, is lacking in credible evidence that the
annuity transactions had economic substance independent of tax
considerations, and is woefully inadequate to demonstrate that
respondent’s determination was wrong.
The inadequacies permeate every aspect of the record. We
shall review in detail some of the problems with the record
presented by petitioners and our reasons for concluding that
petitioners’ evidence is not worthy of belief and is not
sufficient to demonstrate that respondent’s determination was in
error.
1. Failure To Prove Relevant Dates
Petitioners contend that the establishment of the foreign
trusts and Clend, the sale of HouTex stock to Clend in exchange
for private annuities, and the sale and merger of HouTex were
bona fide business transactions that were motivated by a business
purpose and imbued with economic substance independent of tax
considerations. However, the record fails to disclose the dates
when important steps of these transactions took place, making it
difficult, if not impossible, for us to evaluate the legitimacy
of petitioners’ contentions.
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