WILLIAM E. GRAN, SHIRLEY M. GRAN, APPELLANTS,
v.
COMMISSIONER OF INTERNAL REVENUE, APPELLEE
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The court held that the costs of establishing a family trust were nondeductible personal expenses, not ordinary and necessary business expenses.
Taxpayers created a family trust, transferring property and services in an attempt to shift tax liability. They sought to deduct trust establishment c…
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PER CURIAM.
William E. and Shirley M. Gran, husband and wife, appeal from a decision of the United States Tax Court upholding the Commissioner of Internal Revenue’s determination of deficiencies for the 1977 taxable year. Taxpayers here, as in Vnuk v. Commissioner of Int. Rev., 621 F. 2d 1318 (8th Cir. 1980), created a “family trust” to which they transferred certain real and personal property and their lifetime services in an attempt to shift the incidence of taxation to the trust. Taxpayers contend here, as they did in the Tax Court, that conveyance of the “ownership” of their labors, not merely the “use” distinguishes this case from Vnuk, supra. The Tax Court rejected this argument as being without merit and we agree.
The remaining issue is whether Taxpayer could deduct, under § 212(2), the costs of the materials utilized in establishing the trust as an ordinary and necessary business expense or, as the Tax Court held, that none of the property transferred produced, or was intended to produce, income taxable to the Taxpayers and any expenditures were thus nondeductible personal expenses. The findings of fact of the Tax Court are not clearly erroneous and, as we perceive no error of law, the judgment below is affirmed.
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Mertsching v. United States, 704 F.2d 505 (10th Cir. 1983)
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United States v. Landsberger, 692 F.2d 501 (8th Cir. 1982)
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Join FLexlaw to unlock all legal intelligenceAuthorities Cited
- Vnuk v. Commissioner OF Internal Revenue, 621 F.2d 1318 (8th Cir. 1980)