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petitioner.4 The CM Trust agreement stated that CM Trust was
irrevocable. The CM Trust agreement also stated that Kevin
Murphy was CM Trust’s settlor and that Michael Murphy and Lester
Detterback were CM Trust’s trustees.
Ovation is an Illinois general partnership that was formed
on October 27, 2000, and that was liquidated on December 20,
2000. Ovation’s listed owners were four single-member limited
liability companies (LLCs). The LLCs, their members, and their
interests in Ovation were as follows:
LLC Member Interest
Fender Trading, LLC Kevin Murphy 68%
CPM Gibson Trading, LLC CM Trust 13
Martin Trading, LLC Christopher Murphy Trust 13
Ibanez Trading, LLC Michael Murphy 6
On August 31, 2001, petitioner filed his 2000 Federal income
tax return. The return reported CM Trust’s tax attributes (e.g.,
income and deductions) as if CM Trust was petitioner’s grantor
trust; i.e., the return reported the items as if they had been
realized directly by petitioner. On September 9, 2001, CM Trust
filed a 2000 Form 1041, U.S. Income Tax Return for Estates and
Trusts, reporting that CM Trust was petitioner’s grantor trust
for Federal income tax purposes. The trust return included a
“GRANTOR LETTER” identifying petitioner as the grantor of CM
Trust and stated on its face that “UNDER THE TERMS OF THE TRUST
4 The CM Trust agreement lists petitioner’s name with two
“l”s instead of one.
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Last modified: November 10, 2007