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The second factor investigates the presence of any bona fide
independent trustee over the entity in question. A nominal
trustee will not withstand scrutiny under this factor absent a
meaningful role in; i.e., an exercise of control over, the
operation of the trust. Gouveia v. Commissioner, T.C. Memo.
2004-256; Norton v. Commissioner, T.C. Memo. 2002-137; Castro v.
Commissioner, T.C. Memo. 2001-115.
With respect to HGAMC, which employed the term “director” as
opposed to “trustee”, Mr. Quay was initially named as such.
Nonetheless, his brief, 6-day stint is devoid of meaning for
reasons akin to those discussed above in connection with his role
as creator. In particular, his lack of even nominal signatory
authority over any of the financial accounts opened in the
entity’s name belies any true oversight or control. As regards
HGRCT, petitioners were from inception designated as the
trustees, and no third party was named to the position. The
facts thus reveal that petitioners were the sole individuals with
operational control over HGAMC and HGRCT, and that their
discretion was unfettered by any independent trustee.
The third factor looks at whether a genuine economic
interest in the trust passed to any beneficiaries other than
petitioners. The 100 units of beneficial interest in HGAMC were
divided between Mr. Richardson, Mrs. Richardson, and HGRCT. The
100 units of beneficial interest in HGRCT were in turn held by
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