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business and personal matters before and after the
formation of the trust.
3. The taxpayers agree that the trusts are alter egos
of themselves and that all assets held in the name of
the trust are the assets of the taxpayers.
4. The taxpayers agree that all income, expenses,
deductions and credits, as allowed under the
Internal Revenue Code, will be reported on the
individual returns of the taxpayers for taxable years
1997 and 1998 and for all subsequent years. [Emphasis
added.]
5. The taxpayers will be liable for any additional
taxes, civil penalties, and interests on those
individual returns, which may arise because of the non-
recognition of the trust arrangement.
Despite entering into the agreement, petitioners continued
to use the trust in 2000 and 2001 and failed to report the
income, expenses, deductions, and credits on their individual
returns for those years, which returns they filed after the time
permitted by law. Petitioner did not file a Federal income tax
return for 1999, 2002, and 2003. Petitioners underpaid their
income tax for 2000 and 2001. Petitioner underpaid his income
tax for 1999, 2002, and 2003.
Petitioners were uncooperative during the audit process, and
respondent had to engage in summons enforcement. On April 27,
2006, the Court, pursuant to Rule 91(f), granted respondent’s
motion to show cause why proposed facts should not be accepted as
established and made that order absolute after petitioners failed
to file a response as ordered.
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Last modified: May 25, 2011