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HGAMC. Hence, the pertinent documents did not even purport to
give any third party an economic interest in these entities.
The fourth and final factor considered is whether
petitioners felt bound by any restrictions imposed by the trusts
or the law of trusts. In the case of HGAMC, the authority
granted to petitioners as directors was so broad as to impose no
meaningful restrictions. Any fiduciary duties under relevant law
would also be illusory for all practical purposes in that the
circular arrangement of entities utilized left petitioners as the
only true beneficiaries.
Concerning HGRCT, the trust instrument on its face prohibits
transactions that would “in the opinion of the trustees,
jeopardize the federal income tax exemption of this trust
pursuant to section 501(c)(3) of the Internal Revenue Code”.
However, petitioners never even obtained section 501(c)(3) status
for HGRCT. This failure to implement what would seem to be a
basic, foundational premise for the trust’s operation leads us to
conclude that HGRCT’s existence and purported charitable
character (as well as contribution activities in years subsequent
to those in issue) were hardly more than a facade or window
dressing that did little to bind petitioners’ use of their
assets.12
12 Mr. Young explained the understanding of the Aegis trust
structure that he formed through attendance at a seminar or
seminars conducted by Mr. Graham and Mr. Richardson and review of
(continued...)
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