- 36 -
On a related point, we likewise are satisfied that
petitioners should be considered the true grantors of HGRCT.
Although according to the documentation HGAMC purportedly created
HGRCT, this Court in considering the first of the four factors in
the context of multitiered trust arrangements has made no such
distinction. See Castro v. Commissioner, supra; Muhich v.
Commissioner, supra; see also Kooyers v. Commissioner, supra
(“Because petitioners are grantors of the * * * [first-tier]
Trust, they are also grantors of the * * * [second-tier] Trust
and any other trust for which * * * [those] trusts are
grantors.”); Dahlstrom v. Commissioner, T.C. Memo. 1991-264
(“Petitioners were instrumental in the creation of all the trusts
involved in their multitiered arrangement.”), affd. without
published opinion 999 F.2d 1579 (5th Cir. 1993).
Having determined that petitioners should be viewed as the
grantors of HGAMC and HGRCT, we turn to whether their
relationship to property ostensibly transferred to these entities
differed materially before and after the trusts’ formation.
Here, the record reflects that the relationship of petitioners to
both their physical assets and their income-producing activities
remained essentially unchanged. Notably, petitioners continued
to live in and operate their residence with no restriction on
their personal use of that property or any other of their
tangible assets. The only apparent difference stemming from the
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