Court Opinion

ID: 4332650
Source: CourtListenerOpinion
Date Created: 2018-11-14 00:48:04.630035+00
Date Added: 2024-06-11T14:48:05.747492
License: Public Domain

JEFF BURGER PRODUCTIONS, LLC, BANANA MOON TRUST, J.C. CHISUM, TRUSTEE, TAX MATTERS PARTNER, Petitioner v. COMMISSIONER OF INTERNAL REVENUE, RespondentJeff Burger Prods., Inc. v. CommissionerNo. 513-99United States Tax CourtT.C. Memo 2000-72; 2000 Tax Ct. Memo LEXIS 79; 79 T.C.M. (CCH) 1598; March 3, 2000, Filed *79  An order of dismissal for lack of jurisdiction granting respondent's motion will be entered.  Jimmy C. Chisum, for petitioner.Richard A. Rappazzo, for respondent.  Chiechi, Carolyn P.CHIECHIMEMORANDUM OPINIONCHIECHI, 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.BACKGROUNDFor purposes of respondent's motion, the parties do not dispute the following factual allegations that are part of the record. At all relevant times, Jeff Burger Productions, LLC (Jeff Burger Productions), was a limited liability company that is taxed as a partnership because it did not make an election to be taxed as a corporation. Jeff Burger Productions filed partnership income tax returns, Forms 1065 (returns), for taxable years 1994 and 1995. In those returns, it was indicated that there were two partners/members of Jeff Burger Productions, i.e., Banana Moon Trust and Purple Passion Trust. Consequently, the provisions of sections 6221 through 6234 apply.  1*80  Respondent issued a Notice of Final Partnership Administrative Adjustment which was addressed as follows:   JEFF BURGER   TAX MATTERS PARTNER   JEFF BURGER PRODUCTIONS LLC   40 EAST TONTO RIM DRIVE   SEDONA, AZ 86351-7880J.C. Chisum (Mr. Chisum) timely mailed to the Court a petition purportedly filed on behalf of Jeff Burger Productions. Mr. Chisum identified himself in the petition as trustee of Banana Moon Trust. Mr. Chisum further represented in the petition that Banana Moon Trust is the tax matters partner (TMP) for Jeff Burger Productions. Banana Moon Trust was formed under the laws of the State of Arizona.Upon commencement of the examination of the returns filed by Jeff Burger Productions for taxable years 1994 and 1995, respondent requested complete copies of the trust documents relating to Banana Moon Trust, the purported TMP for Jeff Burger Productions, as well as other information. Petitioner refused to provide respondent with the trust documents and other information requested.Respondent's motion contends in pertinent part:     14. There is absolutely no evidence from which   the Court can adduce that Mr. Chisum*81  is the current   trustee of Banana Moon Trust.     15. Petitioner * * * [has] provided no evidence   that the appointment of Mr. Chisum (as trustee) was   valid or authorized under the terms of the trust   indenture * * *.     16. * * * petitioner * * * [has] failed to demonstrate that   Mr. Chisum was legally appointed as trustee of Banana Moon Trust   and therefore, [is] authorized to act on behalf of Banana Moon   Trust (as TMP) and bring the instant case before this Court. See   T.C. Rule 60(c).     17. The capacity of Mr. Chisum to act under   Arizona law and bring the instant suit in this Court,   likewise, has not been established.Petitioner filed a response to respondent's motion in which it asks the Court to deny that motion. That response asserts in pertinent part:   3. The Respondent's objection goes to the management of theTrust, its internal affairs, concerns about its administration, thedeclaration of rights and the determinations of matters involving thetrustee. As the Respondent concedes that these are "Arizona Trusts"[sic] * * *, this*82  issue falls within the exclusive jurisdictionof the superior court here in the State of Arizona. See A.R.S.section 14-7201. At this point, this court is without jurisdiction todetermine whether * * * [Mr. Chisum] is the duly authorized Trustee.The Petitioner need not remind the Court of the consequences oftaking any action over which subject matter is completely lacking.   4. Any objection the Respondent or Respondent's counsel has inthis area must be taken up in the Superior Court here in Arizona,assuming of course the Respondent or Respondent's counsel hasstanding. The irony is of course, if Respondent or Respondent'scounsel does take the matter up with the Superior Court, where theRespondent will have the burden of proof, and if the Superior Courtfinds that the Trusts are [sic] valid, then the Respondent will bebarred by res judicata from asserting the sham trust claim that formsthe basis for his deficiency determination.   5. * * * In essence the factual claims raised by theMotion to Dismiss are inextricably intertwined with the facts goingto the merits of the Commissioner's sham trust claim at issue in thiscase. If the Trusts*83  are [sic] valid, then Mr. Chisum, under ArizonaLaw, will be presumed to be the duly authorized trustee, whether itis as a Trustee of a resulting trust, constructive trust orexpressed [sic] trust. Therefore, the only course available to thisCourt is to defer consideration of the jurisdictional claims to thetrial on the merits. Farr v. United States, 990 F.2d 451">990 F.2d 451, * * *[454] n.1 (9th Cir., 1993). Careau Group v. United Farm Workers [ofAm.], 940 F.2d 1291">940 F.2d 1291, 1293 (9th Cir. 1991). See also Rosales v. UnitedStates, 824 F.2d 799">824 F.2d 799, 803 (9th Cir. 1987) ("A * * * [district]court may hear evidence and make findings of fact necessary to ruleon the subject matter jurisdiction question prior to trial, IF THEJURISDICTIONAL FACTS ARE NOT INTERTWINED WITH THE MERITS.")(Emphasisadded)The Court held a hearing on respondent's motion. At that hearing, Mr. Chisum appeared as trustee for Banana Moon Trust, the purported TMP of Jeff Burger Productions.  2 Petitioner proffered no evidence and presented no new arguments at that hearing. Respondent introduced into evidence at the hearing on respondent's motion documents that appear to*84  be the governing trust documents for Banana Moon Trust, the purported TMP of Jeff Burger Productions, which respondent's examining agent obtained from an unrelated third-party financial institution. Those governing trust documents state that they are "executed under the laws of the Constitution for the United States of America and the Constitution for the State of Nevada". Those documents identify the original trustee of Banana Moon Trust as Sugartree, LLC. The governing trust documents relating to Banana Moon Trust further provide in pertinent part:     1. The Anglo-Saxon Common Law Irrevocable Pure   Trust for Asset Protection Purposes, also known as an   Asset Protection Trust, created*85  by this Contract and   Indenture on this 30th day of September, 1994, is   authorized to exist and function by and through its   Board of Trustees (hereinafter referred to as the   Board) pursuant to all of the conditions contained   herein, with certain assets to be administered by the   Trustee for the benefit of the Holders of Capital Units   (hereinafter referred to as Beneficiaries) represented   by Certificates of Beneficial Interest, in accordance   with the unalienable Anglo-Saxon Common Law rights   afforded to man. * * *           *   *   *  *   *   *   *       6. This Trust shall be originally domiciled in    the State of Nevada, and shall be interpreted and    construed under the Constitution of the United States    and the laws of the State of Nevada. The domicile, and    thereby the controlling interpretational laws under    which the Trust shall be construed, may be changed to    any other State or Nation as shall be deemed prudent,    wise, necessary, or appropriate by the Board [of Trustees]. *86             *   *   *   *   *   *   *       14. The Creator shall appoint a Fiduciary to    serve as "Protector" of the Beneficiaries. The Protector    shall be an independent third party with no obligations to    any other party to this Trust. The Protector shall have the    power to remove any Trustee who violates any term or    condition of this Trust agreement, or is in breach of any    Anglo-Saxon Common Law Trustee duty, and shall have the power    to appoint a Successor Trustee to fill any vacancy which    occurs for any reason.          *   *   *   *   *   *   *       16. The Board [of Trustees] shall have, except as    modified by the terms of this Indenture and the Minutes    of the Board interpreting the same, all of the powers    of Trustees under the Anglo-Saxon Common Law, as well    as those specified under the laws of the State of    Nevada. * * *           *   *   *   *   *   *   *   *87      33. The Trustee may be replaced in any of the    following manners:         A. Resignation. The Trustee may resign with    or without cause at any time by sending a notice of his    intention to do so to the Trust principle [sic] office    by Certified Mail. However, such resignation shall not    be effective unless and until such time as a Successor    Trustee has accepted the appointment to assume the    duties and responsibilities of Trustee on the expiration    date of the outgoing Trustee, or thirty days after    receipt of the resignation, whichever occurs first.         B. Removal. Upon complaint for proper cause    by any agent or person appointed by the Trust, the    Protector shall appoint a Committee of Arbitrators    (hereinafter referred to as the Committee), to investigate    the complaint.           *   *   *   *   *   *   *          2. The Committee shall have the power,   upon meeting, investigation, and a two-thirds*88  (           *   *   *   *   *   *   *        C. Incapacitation. In the event the Trustee   is unavailable to participate in the process of his   removal or the selection of a Successor Trustee, the   Protector shall have the authority to execute an affidavit,   under oath, setting forth the unavailability of the Trustee.   * * *        D. Court Appointment. In the event it   becomes necessary to litigate the removal of a Trustee   and/or appointment of a Successor Trustee, the Trust,   by and through its Beneficiaries, may apply to a court   of competent jurisdiction for the appointment of a   Successor Trustee.               DISCUSSION  Rule 60 provides in pertinent part:     (c) Capacity: * * * The capacity of a fiduciary   or other representative to litigate in the Court shall   be determined in accordance with the law of the jurisdiction   from which such person's authority is derived.   The governing trust documents pertaining to Banana MoonTrust, the purported*89  TMP of Jeff Burger Productions, suggest that Banana Moon Trust was organized as a trust under the laws of the State of Nevada. However, in petitioner's response to respondent's motion and at the hearing on that motion, Mr. Chisum asserted that the administration of Banana Moon Trust is governed by the laws of the State of Arizona and that the exclusive jurisdiction in determining the validity of the trustee is in the Superior Court of the State of Arizona.Assuming arguendo, as petitioner claims, that Banana Moon Trust, the purported TMP of Jeff Burger Productions, is a trust, the administration of which is subject to 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.  3 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">65 T.C. 346, 348 (1975); National Comm. to Secure Justice in the Rosenberg Case v. Commissioner, 27 T.C. 837">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">35 T.C. 177, 180 (1960);*90 Consolidated Cos., Inc. v. Commissioner, 15 B.T.A. 645">15 B.T.A. 645, 651 (1929). In order to meet that burden, petitioner must provide evidence establishing that Mr. Chisum has authority to act on behalf of Banana Moon Trust, the purported TMP of Jeff Burger Productions. See National Comm. to Secure Justice in the Rosenberg Case v. Commissioner, supra 27 T.C. at 839-840; Coca-Cola Bottling Co. v. Commissioner, 22 B.T.A. 686">22 B.T.A. 686, 700 (1931). We reject petitioner's position that under Arizona law the validity of the purported appointment of Mr. Chisum as the trustee of Banana Moon Trust falls within the exclusive jurisdiction of the courts of the State of Arizona.*91  On the record before us, we find that petitioner has failed to establish that Mr. Chisum is authorized to act on behalf of Banana Moon Trust, the purported TMP of Jeff Burger Productions.  4To reflect the foregoing,An order of dismissal for lack of jurisdiction granting respondent's motion will be entered.  Footnotes1. All 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.↩2. At the hearing, the Court informed Mr. Chisum that its allowing him to appear at the hearing as the alleged trustee of Banana Moon Trust, the purported TMP of Jeff Burger Productions, did not mean that the Court agreed that he in fact was a duly appointed and authorized trustee of Banana Moon Trust.↩3. Assuming arguendo, as the governing trust documents pertaining to Banana Moon Trust suggest, that Banana Moon Trust, the purported TMP of Jeff Burger Productions, is a trust, the administration of which is subject to the laws of the State of Nevada, under Nevada law, see Rule 60(c), a trustee has the power to commence litigation on behalf of a trust if the trust instrument so provides. See Nev. Rev. Stat. Ann. secs. 163.260 and 163.375↩ (Michie 1993). The governing trust documents pertaining to Banana Moon Trust state in pertinent part that the board of trustees of Banana Moon Trust was to have "all of the powers of Trustees under the Anglo- Saxon Common Law, as well as those specified under the laws of the State of Nevada."4. We 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.↩