- 38 -
6. Role of Clend
Neither the Melniks nor Mr. Pennoni offered any testimony
regarding the business purpose for, or the role of, Clend, and
the record fails to establish that Clend was acquired for reasons
other than tax avoidance.
This Court has decided a number of cases involving foreign
trusts and/or private annuity transactions involving foreign
trusts. See, e.g., Weigl v. Commissioner, 84 T.C. 1192 (1985);
Estate of Fabric v. Commissioner, 83 T.C. 932 (1984); Benson v.
Commissioner, 80 T.C. 789 (1983); Stern v. Commissioner, 77 T.C.
614 (1981), revd. 747 F.2d 555, 558 (9th Cir. 1984); LaFargue v.
Commissioner, 73 T.C. 40 (1979), affd. in part and revd. in part
689 F.2d 845 (9th Cir. 1982); Lazarus v. Commissioner, 58 T.C.
854, 864 (1972) (The principle of substance over form is
“peculiarly applicable to annuities and trusts because they are
easily susceptible of manipulation so as to create illusion.”),
affd. 513 F.2d 824 (9th Cir. 1975); Bixby v. Commissioner, 58
T.C. 757, 789 (1972); Archbishop Samuel Trust v. Commissioner, 36
T.C. 641 (1961), affd. sub nom. Samuel v. Commissioner, 306 F.2d
682 (1st Cir. 1962); Waegemann v. Commissioner, T.C. Memo. 1993-
632. Except for Estate of Fabric v. Commissioner, supra, and
Benson v. Commissioner, supra, in which we were required, under
the rule of Golsen v. Commissioner, 54 T.C. 742, 757 (1970),
affd. 445 F.2d 985 (10th Cir. 1971), to follow adverse precedent
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