T.C. Memo. 2000-64

UNITED STATES TAX COURT

SCENIC WONDERS GALLERY, LLC, PHOTO ART MARKETING TRUST,

TAX MATTERS PARTNER, Petitioner v. 

COMMISSIONER OF INTERNAL REVENUE, Respondent

Docket No. 20509-98. Filed February 29, 2000.

John P. Wilde, for petitioner.

David W. Otto and Doreen M. Susi, for respondent.

MEMORANDUM OPINION

CHIECHI, Judge: This case is before the Court on respondent's motion to dismiss for lack of jurisdiction (respondent’s

motion). We shall grant respondent’s motion. 
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1All section references are to the Internal Revenue Code in

effect for the years at issue. All Rule references are to the

Tax Court Rules of Practice and Procedure.

Background

For purposes of respondent’s motion, the parties do not

dispute the following factual allegations that are part of the

record. At all relevant times, Scenic Wonders Gallery, LLC

(Scenic Wonders) was a limited liability company that is taxed as

a partnership because it did not make an election to be taxed as

a corporation. Scenic Wonders filed partnership income tax

returns, Forms 1065 (returns), for taxable years 1995 and 1996. 

In those returns, it was indicated that there were two partners/members of Scenic Wonders, i.e., Photo Art Publishing Trust

and Photo Art Marketing Ent. Consequently, the provisions of

sections 6221 through 6234 apply.1

Respondent issued a Notice of Final Partnership Administrative Adjustment which was addressed as follows:

TAX MATTERS PARTNER

SCENIC WONDERS GALLERY LLC

PHOTO ART MARKETING ENTERPRISES

320 N 89A 14

SEDONA, AZ 86336

John P. Wilde (Mr. Wilde) timely mailed to the Court a

petition purportedly filed on behalf of Scenic Wonders. Mr.

Wilde identified himself in the petition as co-trustee of Photo

Art Marketing Trust. Mr. Wilde further represented in the
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petition that Photo Art Marketing Trust is the tax matters

partner (TMP) for Scenic Wonders. Photo Art Marketing Trust was

formed under the laws of the State of Arizona. 

Upon commencement of the examination of the returns filed by

Scenic Wonders for taxable years 1995 and 1996, respondent

requested complete copies of the trust documents relating to

Photo Art Marketing Trust, the purported TMP for Scenic Wonders,

documentation regarding those returns, the nature of the business

of Scenic Wonders, and the relationship of Scenic Wonders to its

alleged owners, as well as other items of substantiation. 

Neither the trust documents nor the other documents and information requested was provided to respondent. 

Respondent’s motion contends in pertinent part:

15. * * * all of respondent’s records regarding

the TMP trust [Photo Art Marketing Trust] indicate an

entity named D & E Sword Company is the trustee. These

records are based upon representations made by the TMP

trust to respondent in correspondence, and in representations made by the TMP trust in its petition with this

Court in a related docketed case (Docket No. 16506-98). 

16. Respondent’s counsel contacted the Arizona

Corporation Commission to determine the existence/

validity of the entity called D & E Sword Company. The

Corporation Commission informed respondent’s counsel

that it had no record of any entity by that name ever

existing in the State of Arizona. Further, the Corporation Commission informed respondent’s counsel that it

had no record of any entity incorporated in Arizona

under the name of, or in reference to, an individual

named John P. Wilde.
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17. There is absolutely no evidence from which

the Court can adduce that there has been a legal assignment of John P. Wilde as the Co-Trustee of the TMP

Trust. 

18. Petitioner has provided no evidence that Mr.

Wilde’s appointment as Co-Trustee is valid or authorized under the terms of the TMP trust indenture (assuming one exists).

* * * * * * *

20. * * * petitioner has failed to demonstrate

that John P. Wilde was legally appointed as Co-Trustee

authorized to act on behalf of the TMP trust and bring

the instant case before this Court. See T.C. Rule

60(c). 

Petitioner filed an objection to respondent’s motion in

which it asks the Court to deny that motion. That objection

asserts in pertinent part:

3. The Respondent’s objection goes to the management of the Trust, its internal affairs, concerns about

its administration, the declaration of rights and the

determinations of matters involving the trustee. As

the Respondent concedes that these [sic] are “Arizona

Trusts” [sic] * * *, this issue falls within the exclusive jurisdiction of the superior court here in the

State of Arizona. See A.R.S. § 14-7201. At this

point, this court is without jurisdiction to determine

whether * * * [Mr. Wilde] is the duly authorized

Trustee. The Petitioner need not remind the Court of

the consequences of taking any action over which subject matter is completely lacking. 

4. Any objection the Respondent or Respondent’s

counsel has in this area must be taken up in the Superior Court here in Arizona, assuming of course the

Respondent or Respondent’s counsel has standing. The

irony is of course, if Respondent or Respondent’s

counsel does take the matter up with the Superior

Court, where the Respondent will have the burden of

proof, and if the Superior Court finds that the Trusts

are valid, then the Respondent will be barred by res
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2At the hearing, the Court informed Mr. Wilde that its

allowing him to appear at the hearing as the alleged trustee of

Photo Art Marketing Trust did not mean that the Court agreed that

he in fact was a duly appointed and authorized trustee of that

entity. 

judicata from asserting the sham trust claim that forms

the basis for his deficiency determination. 

5. * * * In essence the factual claims raised by

the Motion to Dismiss are inextricably intertwined with

the facts going to the merits of the Commissioner’s

sham trust claim at issue in this case. If the Trusts

[sic] are valid, then Mr. * * * [Wilde], under Arizona

Law, will be presumed to be the duly authorized

trustee, whether it is as a Trustee of a resulting

trust, constructive trust or expressed [sic] trust. 

Therefore, the only course available to this Court is

to defer consideration of the jurisdictional claims to

the trial on the merits. Farr v. United States, 990

F.2d 451, * * * [454] n.1 (9th Cir., 1993). Careau

Group v. United Farm Workers [of Am.], 940 F.2d 1291,

1293 (9th Cir. 1991). See also Rosales v. United

States, 824 F.2d 799, 803 (9th Cir. 1987) (“A * * *

[district] court may hear evidence and make findings of

fact necessary to rule on the subject matter jurisdiction question prior to trial, if the jurisdictional

facts are not intertwined with the merits.”)(Emphasis

added)

The Court held a hearing on respondent’s motion. At that

hearing, Mr. Wilde appeared as trustee for Photo Art Marketing

Trust, the purported TMP of Scenic Wonders.2 Petitioner proffered no evidence, and the parties presented no new arguments, at

that hearing. 

Discussion

Rule 60 provides in pertinent part:

(c) Capacity: * * * The capacity of a fiduciary

or other representative to litigate in the Court shall
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be determined in accordance with the law of the jurisdiction from which such person's authority is derived.

The parties do not dispute that Photo Art Marketing Trust,

the purported TMP of Scenic Wonders, is a trust organized under

the laws of the State of Arizona. Under Arizona law, see Rule

60(c), a trustee has the power to commence litigation on behalf

of a trust. See Ariz. Rev. Stat. Ann. sec. 14-7233.C.25. (West

1995). In the instant case, petitioner has the burden of proving

that this Court has jurisdiction, see Fehrs v. Commissioner, 65

T.C. 346, 348 (1975); National Comm. to Secure Justice in the

Rosenberg Case v. Commissioner, 27 T.C. 837, 839 (1957), by

establishing affirmatively all facts giving rise to our jurisdiction, see Wheeler's Peachtree Pharmacy, Inc. v. Commissioner, 35

T.C. 177, 180 (1960); Consolidated Cos., Inc. v. Commissioner, 15

B.T.A. 645, 651 (1929). In order to meet that burden, petitioner

must provide evidence establishing that Mr. Wilde has authority

to act on behalf of Photo Art Marketing Trust, the purported TMP

of Scenic Wonders. See National Comm. to Secure Justice in the

Rosenberg Case v. Commissioner, supra at 839-840; Coca-Cola

Bottling Co. v. Commissioner, 22 B.T.A. 686, 700 (1931). We

reject petitioner's position that under Arizona law the validity

of the purported appointment of Mr. Wilde as a trustee of Photo

Art Marketing Trust falls within the exclusive jurisdiction of

the courts of the State of Arizona. 
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3We have considered all of the contentions and arguments of

petitioner that are not discussed herein, and we find them to be

without merit and/or irrelevant. 

On the record before us, we find that petitioner has failed

to establish that Mr. Wilde is authorized to act on behalf of

Photo Art Marketing Trust, the purported TMP of Scenic Wonders.3 

To reflect the foregoing, 

An order of dismissal for lack

of jurisdiction granting respondent’s motion will be entered.