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Jeff Burger Productions, LLC v. C.I.R.
MEMORANDUM
OPINION JUDGE:
CHIECHI, J.
Background
FN1. 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.
JEFF BURGER J.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 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 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 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. Chisum] 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 [sic] valid, then the
Respondent will be barred by res 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 are [sic] valid, then Mr.
Chisum, 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. Chisum appeared
as trustee for Banana Moon Trust, the purported TMP of Jeff Burger Productions.
[FN2] 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 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: FN2. 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.
* * * * * * * * * * * * 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. * * * * * * 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.
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. [FN4] FN4. 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.
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