888 Trust was devoid of economic reality. Taxpayer maintained control of money - circular flow of funds. Underpayment of taxes was due to fraud. Taxpayer liable for additions to taxes. Trusts were considered a sham because taxpayer had complete control of property - the creator of the trust had no management rights.
Income is includible in taxpayer's gross income.
Because the corporation failed to maintain books and records, the corporation is negligent. 58 TCM 46,124 Investment company was established to shelter income. Taxpayer knowingly filed false W-4's, therefore, fraudulent intent. Taxpayer had effective ownership and control of property in trust, therefore, court concluded the trust was a sham - fraud penalties are warranted, taxpayer received unreported income from trust and concealed assets in trust. 61 TCM 47,402 Trusts created by American Law Assoc. were shams and lacked economic substance.