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be the person who actually funded the trust as opposed to the
person named as the grantor in the trust instrument. United
States v. Buttorff, 761 F.2d 1056, 1060-1061 (5th Cir. 1985);
Schulz v. Commissioner, 686 F.2d 490, 496 (7th Cir. 1982), affg.
T.C. Memo. 1980-568. In Schulz, for example, the taxpayer’s wife
was considered the grantor of a family trust because the
conveyance of the wife’s assets to her husband (which were used
to fund the trust) was disregarded.
B. The Parties’ Arguments
Petitioners contend the Bea Ritch Trusts were not Kanter’s
grantor trusts during 1986 or 1987. Petitioners assert Kanter’s
mother, not Kanter, was the trusts’ nominal and true settlor.
Although the 25 trusts made a number of profitable investments
attributable to Kanter’s advice and recommendations to Weisgal
(the trusts’ trustee), petitioners maintain Weisgal made all
final investment decisions for the trusts.
Respondent, on the other hand, advances a number of
arguments in contending the 1986 and 1987 adjustments to Kanter’s
income should be sustained. Respondent contends Kanter is the
true settlor of the Bea Ritch Trusts as evidenced by the
substantial amounts he transferred to or for the benefit of the
trusts over the years including (1) his share of payments from
The Five to IRA and THC (discussed supra, Issue I) in which the
Bea Ritch Trusts held substantial stock interests), (2) Kanter’s
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