                          T.C. Memo. 2000-72



                       UNITED STATES TAX COURT



         JEFF BURGER PRODUCTIONS, LLC, BANANA MOON TRUST,
    J.C. CHISUM, TRUSTEE, TAX MATTERS PARTNER, Petitioner v.
           COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 513-99.                          Filed March 3, 2000.



     Jimmy C. Chisum, for petitioner.

     Richard A. Rappazzo, 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.
                               - 2 -


                             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, 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 part-

nership 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

     Respondent issued a Notice of Final Partnership Administra-

tive Adjustment which was addressed as follows:

     JEFF BURGER
     TAX MATTERS PARTNER
     JEFF BURGER PRODUCTIONS LLC
     40 EAST TONTO RIM DRIVE
     SEDONA, AZ 86351-7880

     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 peti-



     1
      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.
                                - 3 -


tion 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, respon-

dent 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 re-

quested.

     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 inden-
     ture * * *.

          16. * * * petitioner * * * [has] failed to demon-
     strate 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:
                         - 4 -


     3. The Respondent’s objection goes to the manage-
ment 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 conse-
quences 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 Supe-
rior 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, con-
structive 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
                              - 5 -


hearing, Mr. Chisum appeared as trustee for Banana Moon Trust,

the purported TMP of Jeff Burger Productions.2    Petitioner prof-

fered no evidence and presented no new arguments at that hearing.

Respondent introduced into evidence at the hearing on respon-

dent’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:

          1. The Anglo-Saxon Common Law Irrevocable Pure
     Trust for Asset Protection Purposes, also known as an
     Asset Protection Trust, created 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


     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.
                         - 6 -


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 Trus-
tees].

   *         *       *       *        *        *           *

     14. The Creator shall appoint a Fiduciary to
serve as “Protector” of the Beneficiaries. The Protec-
tor shall be an independent third party with no obliga-
tions 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. * * *

   *      *       *       *          *        *        *

     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 expira-
                                 - 7 -


     tion 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 investi-
     gate the complaint.

        *      *       *         *           *       *       *

                    2. The Committee shall have the power,
     upon meeting, investigation, and a two-thirds (2/3)
     majority vote, to remove the Trustee for the following
     specific reasons constituting proper cause: a) insol-
     vency, b) negligence, c) incompetence, or d) failure to
     perform fiduciary duties under the terms of the
     Contract.

        *      *      *      *           *       *       *

               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 affi-
     davit, 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 juris-
     diction from which such person's authority is derived.

     The governing trust documents pertaining to Banana Moon

Trust, the purported TMP of Jeff Burger Productions, suggest that
                               - 8 -


Banana Moon Trust was organized as a trust under the laws of the

State of Nevada.   However, in petitioner’s response to respon-

dent’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 jur-

isdiction 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, 348 (1975);

National Comm. to Secure Justice in the Rosenberg Case v. Commis-

sioner, 27 T.C. 837, 839 (1957), by establishing affirmatively


     3
      Assuming arguendo, as the governing trust documents per-
taining to Banana Moon Trust suggest, that Banana Moon Trust, the
purported TMP of Jeff Burger Productions, is a trust, the admin-
istration 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.”
                               - 9 -


all facts giving rise to our jurisdiction, see Wheeler's Peach-

tree 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. 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 Rosen-

berg 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. Chisum as the trustee of Banana Moon

Trust falls within the exclusive jurisdiction of the courts of

the State of Arizona.

     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.4




     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.
                        - 10 -



To reflect the foregoing,

                                 An order of dismissal for lack

                            of jurisdiction granting respon-

                            dent’s motion will be entered.
