                        T.C. Memo. 2003-126



                      UNITED STATES TAX COURT



           THE ADORNO BUSINESS COMPANY, Petitioner v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 9457-02.              Filed May 1, 2003.


     Edwin R. Adorno, pro se.

     Jason W. Anderson, for respondent.



                        MEMORANDUM OPINION

     DAWSON, Judge:   This case was assigned to Special Trial

Judge Robert N. Armen, Jr., pursuant to the provisions of section

7443A(b)(5) and Rules 180, 181, and 183.1     The Court agrees with

and adopts the opinion of the Special Trial Judge, which is set

forth below.


     1
        Unless otherwise indicated, all section references are to
the Internal Revenue Code, as amended, and all Rule references
are to the Tax Court Rules of Practice and Procedure.
                                 - 2 -

                OPINION OF THE SPECIAL TRIAL JUDGE

     ARMEN, Special Trial Judge:     This matter is before the Court

on respondent’s motion to dismiss for lack of jurisdiction.

Respondent maintains that Edwin R. Adorno (Mr. Adorno), the

individual who signed the petition, is not a proper party

authorized to bring suit on behalf of The Adorno Business Company

(Adorno Business) under Rule 60.    As discussed in detail below,

we shall grant respondent’s motion and dismiss this case for lack

of jurisdiction.

Background

     A.   Notice of Deficiency

     Respondent issued a notice of deficiency to Adorno Business

determining a deficiency in its Federal income tax for the

taxable year 1998 in the amount of $758,744 and an accuracy-

related penalty under section 6662(a) in the amount of $151,749.

In the notice of deficiency, respondent disallowed the

deductions claimed by Adorno Business on Schedule C, Profit or

Loss from Business, because it “failed to establish the amount,

if any, that was paid during the taxable year for ordinary and

necessary business expenses and you failed to establish the cost

or other basis of the property claimed to have been used in

business”.   Respondent also disallowed the income distribution

deduction claimed by Adorno Business because it “failed to

establish that the requirements for deduction of IRC sections 651
                               - 3 -

or 661 were satisfied”.   Finally, respondent determined that

Adorno Business is liable for an accuracy-related penalty due to

negligence or disregard of rules and regulations, a substantial

understatement of income tax, or a substantial valuation

overstatement.

     B.   Petition

     The Court subsequently received and filed a petition for

redetermination challenging the notice of deficiency.2   The

petition was signed by Mr. Adorno as “Edwin R. Adorno

(Director)”.3

     Paragraph 4 of the petition, which sets forth the bases on

which the notice of deficiency is challenged, alleges as follows:

     (1) Business trust are an acceptable business entity
     according to Reg. 301.7701.4(b). (2) Business trust
     has a business purpose for profit. * * * (3) Business
     deductions are allowed IRC section 661.[4]

     2
        The principal place of business of Adorno Business was in
Chicago, Ill., at the time that the petition was filed with the
Court.
     3
        Use of the terms “director” and “executive director” in
this opinion is intended for narrative convenience only. Thus,
no inference should be drawn from our use of such terms regarding
any legal status or relationship.
     4
        A business trust (commonly known as a “Massachusetts
trust”) is an unincorporated business organization created by a
declaration of trust wherein property is conveyed to a trustee to
hold and manage for the benefit and profit of such persons as may
be or become the holders of transferable certificates evidencing
the beneficial interests in the trust estate. State St. Trust
Co. v. Hall, 41 N.E.2d 30, 34 (Mass. 1942). See generally Hynes
v. Commissioner, 74 T.C. 1266 (1980), and cases cited therein for
a discussion on business trusts. The purpose of a business trust
                                                   (continued...)
                                - 4 -

     C.   Respondent’s Motion

     Respondent filed a motion to dismiss for lack of

jurisdiction.   In the motion, respondent asserts that this case

should be dismissed for lack of jurisdiction because “the

petition in the instant case was not brought by a party with

proper capacity”.   Respondent further contends:

          Upon commencement of the examination of
     petitioner’s 1998 taxable year, respondent requested a
     copy of the complete trust documents for petitioner.
     Petitioner failed to cooperate with respondent and
     provide the documents requested during the examination
     of this case.

          To date [July 22, 2002], petitioner has not provided
     respondent with trust documents which establish the chain of
     trusteeship from the creation of the trust until the time
     the petition was filed.

          Petitioner has not provided sufficient evidence that
     the appointment of Mr. Adorno, as trustee or as an agent of
     the trustee, was valid or authorized under the terms of the
     respective trust indentures.

     Upon the filing of respondent’s motion to dismiss, the Court

issued an order directing Adorno Business to file an objection,

if any, to respondent’s motion, taking into account Rule 60, and

to attach to the objection a copy of the trust instrument or

other documentation identifying the fiduciary or other



     4
      (...continued)
is to carry on a business or commercial activity for profit.   Id.

     Use of the terms “trust”, “trustee”, and “trust instrument”
(and their derivatives) in this opinion is intended for narrative
convenience only. Thus, no inference should be drawn from our
use of such terms regarding any legal status or relationship.
                                    - 5 -

representative with legal capacity to institute a case on behalf

of Adorno Business.

     D.       Mr. Adorno’s Objection

     Ultimately, the Court received an objection, leave for the

filing of which was granted, to respondent’s motion to dismiss.

Mr. Adorno signed the objection as the “Director of The Adorno

Business Company”.       In the objection, Mr. Adorno contends that he

is Adorno Business’ representative and authorized fiduciary with

the authority to act as director, and to sign on behalf, of

Adorno Business.        In support thereof, Mr. Adorno attached to the

objection a two-page document entitled “The Adorno Business

Company, Minutes of Second Meeting, December 26, 1995” (second

minutes).       The second minutes provide, in part, as follows:

     At this, the SECOND MEETING of the Board of Directors[5]
     of The Adorno Business Company * * * a MAJORITY of the
     Directors being present, by unanimous accord the
     following was affirmed and ratified, viz:

          *         *        *         *     *       *       *

     18.       That the prime responsibility of the Board of
               Directors is to manage The Adorno Business
               Company, it’s [sic] business, and it’s [sic]
               assets in such a manner as to insure predominate
               consideration, for the welfare of the
               beneficiaries rights to income distributions. * *
               * And, that it is expected and hereby declared
               inviolate, that as Directors of The Adorno
               Business Company resign, retire, succumb, or are
               removed * * * their places will be filled on the


     5
        Based on the record as a whole, it appears that Mr.
Adorno has been the sole member of the “Board of Directors” at
all relevant times.
                                      - 6 -

               Board of Directors, PREFERABLY by and from
               succeeding generations of blood relatives of the
               Directors of The Adorno Asset Management Company *
               * *.

     19.       That, in the best interest of The Adorno Business
               Company, the Director hereby nominates,
               unanimously elects, and appoints Edwin R. Adorno
               as THE EXECUTIVE Director of The Adorno Business
               Company.

          *         *       *          *      *      *       *

                 /s/
     Edwin R. Adorno, Director

The second minutes do not list the name of a “trustee” for Adorno

Business nor make any reference to a “trustee”.

     The objection also challenges respondent’s authority to

determine a deficiency against Adorno Business because “IRR

301.7701-4(b) clearly states that: there is another entity that

is like a trust, but it is not recognized (not known to exist) as

a trust for internal revenue purposes”.

     E.       Respondent’s Response

     At the Court’s direction, respondent filed a response to the

foregoing objection.       Respondent contends that the second minutes

do not establish that Adorno Business appointed Mr. Adorno as its

trustee under Illinois law, and, therefore, Mr. Adorno is not

authorized to act on behalf of Adorno Business.

     Upon the filing of respondent’s response, the Court issued

an order directing both parties to file certain documents with

the Court.       Pursuant to the Court’s order, respondent filed,
                                  - 7 -

inter alia, a complete copy of a Form 1041, U.S. Income Tax

Return for Estates and Trusts (Form 1041), filed in the name of

Adorno Business for 1998.6   The Form 1041, which was executed by

Mr. Adorno on September 15, 1999, lists the date the entity was

created as December 22, 1995.

     F.   Mr. Adorno’s Response

     Specifically, the Court ordered Adorno Business to produce:

     (1) a complete copy of the organizational document(s)
     related to the creation of petitioner; (2) a complete
     copy of all the minutes that preceded in time the
     “Minutes of Second Meeting - December 26, 1995” that
     was attached to petitioner’s Objection filed September
     3, 2002; and (3) any and all other documentation
     identifying the fiduciary or other representative
     thought to have legal capacity to institute this the
     present case on behalf of petitioner.

Ultimately, the Court received a response, leave for the filing

of which was granted, to its order for document production.   Mr.

Adorno signed the response as “Edwin R. Adorno, Trustee, Adorno

Business Company”.7   Mr. Adorno attached to the response, inter


     6
        Attached to the Form 1041 was a Schedule C, Profit or
Loss From Business, indicating the principal business of Adorno
Business as “Retail/Used Auto’s”. Also attached was a Schedule
K-1, Beneficiary’s Share of Income, Deductions, Credits, etc.,
indicating the beneficiary as “The Adorno Asset Management Trust”
(Adorno Asset). See infra note 12. At trial, Mr. Adorno
testified that Adorno Business operates its business on a used
car lot at 1442 North Western, Chicago, Ill., and that Adorno
Business pays rent to Adorno Asset for use of the lot.
Apparently, Adorno Asset is only engaged in the business of
collecting rent from Adorno Business for use of the lot.
     7
        This was the first time in the record that Mr. Adorno
claimed to be the purported trustee of Adorno Business. At all
                                                   (continued...)
                              - 8 -

alia, a copy of an eight-page purported trust instrument dated

December 22, 1995 (purported trust instrument), a two-page

document entitled “The Adorno Business Company, Minutes of First

Meeting, December 22, 1995” (first minutes), and a notarized

affidavit dated October 17, 2002.

     The purported trust instrument8 provides, in part, as

follows:

                COMMON LAW BUSINESS ORGANIZATION
    THIS COMMON LAW CONTRACT IN THE FORMAT OF AN IRREVOCABLE
 DECLARATION OF TRUST AUTHORIZES ITS DIRECTORS TO OPERATE UNDER
                           THE NAME OF
                   The Adorno Business Company
                  (referred to as the company)
                     DATED December 22, 1995

          THIS agreement, conveyance and acceptance is made
     and entered into at the time and on the date appearing
     in the acknowledgment hereto attached, by and between
     The Adorno Asset Management Company CREATOR hereof and
     INVESTOR herein, Edwin R. Adorno, Acceptor hereof in
     fee simple as Director who shall comprise the Board of
     Directors for conducting the business of The Adorno
     Business Company hereby established.

          THE CREATOR hereby constitutes and appoints the
     above designated Director to be, in fact, Director of
     The Adorno Business Company hereby created and
     established. THE CREATOR for and in consideration of
     the objects and purposes herein set forth and other
     considerations of value the receipt of which is hereby


     7
      (...continued)
other relevant times, Mr. Adorno claimed to be the director,
fiduciary, legal representative, or executive director of Adorno
Business.
     8
        The provisions of the purported trust instrument are
substantially identical to the purported trust instrument in The
Adorno Asset Mgmt. Trust v. Commissioner, T.C. Memo. 2003-127.
See infra note 12.
                             - 9 -

    acknowledged, does hereby convey and deliver unto said
    Director, who is to hold title in fee simple, the sum
    of $10.00 in cash and other considerations of value,
    which shall form the assets of this Company.

     The Adorno Asset Management Company shall receive, as
     part consideration for it’s conveyance: All One Hundred (100) units of
Interest in the income and assets of The Adorno Business Company.

       *       *       *       *       *       *       *

    THE DIRECTORS herein named, or their successors elected
    to fill vacancies, shall hold office, have and exercise
    collectively the exclusive management and control of
    The Adorno Business Company property and business
    affairs.

       *       *       *       *       *       *       *

    POWER OF DIRECTORS: Directors’ powers shall be
    construed as general powers of a citizen of the UNITED
    STATES OF AMERICA, to do anything any citizen may do in
    any state or country, subject to the type restrictions
    herein noted. They shall continue in business,
    conserve the property, commercialize the resources,
    extend any established line of business in industry or
    investment, as herein specially noted, at their
    discretion for the benefit of this Company, vis:
    perform as agents for the surface or mineral rights buy
    or sell mortgages, securities, bonds, notes, leases of
    all kinds, contracts or credits of any form, patents,
    trademarks, or copyrights buy, sell, or conduct mail-
    order business, or branches thereof operate stores,
    shops, factories, warehouses or other places of
    business, advertise, borrow money, pledging the Company
    property for the payment thereof, hypothecate assets
    and other property, own stock in, or entire charters of
    TRUST COMPANIES, and or corporations, or other such
    properties, companies, or associations as they may deem
    advantageous.

       *       *       *       *       *       *       *

    OFFICERS AND MANAGEMENT: The Directors may in their
    discretion elect among their number, or any other
    person, an Executive Director, Executive Secretary,
    Treasurer Director * * *. Any Directors may hold two
    or more offices simultaneously, * * *
                                - 10 -

         *        *       *       *        *      *       *

     IN WITNESS WHEREOF the Creator/Investor and Acceptor
     hereof * * * have hereunto set their hands and seals.

          Director of The Adorno Asset Management Company
     (INVESTOR)

                 /s/
     Edwin R. Adorno, Director

             Director of The Adorno Business Company

                 /s/
     Edwin R. Adorno, Director

     This document prepared by:
     Name: Attorney Edward Bartoli[9]


     9
        At the hearing, Mr. Adorno was abrupt and evasive in
responding to the Court’s questions concerning Edward Bartoli
wherein the following colloquy ensued:

     Q: Are you familiar with Edward Bartoli?

     A: Yes. * * * I believe he was one – a company that was
     involved.

     Q: Involved in what?

     A: Your Honor, at this time, I stand by my
     stipulations, Your Honor.

     Q: Okay.    Who was Edward Bartoli?

     A: Mr. Bartoli, director of the Aegis Company,
     something like that.

     Q: Did you have any dealings with this individual?

     A: At the time of forming the trust – Your Honor, I
     stand by my stipulation.

     Q: You’re unable to answer our question? Is that what
     your response is?
     A: Right now, yes.
                                                   (continued...)
                                 - 11 -

     Address: 11022 Southwest Hwy., Palos Hills, IL 60465

The purported trust instrument does not list the name of any

“trustee” for Adorno Business nor make any reference to a

“trustee”.      Further, none of the provisions of the purported

trust instrument grant the director the power to litigate on

behalf of Adorno Business.

     The first minutes10 provide, in part, as follows:

     At this, the FIRST MEETING of the BOARD OF DIRECTORS of
     The Adorno Business Company * * *. All Directors being
     present, by unanimous accord the following was affirmed
     and ratified, viz:

     1.       That, pursuant to the request and declaration of
              The Adorno Asset Management Company, on this date,
              a Contract Creating This Entity creating The
              Adorno Asset Management Company (A Common Law
              Business Organization) was duly executed,
              acknowledging Edwin R. Adorno, its Director, and
              the above named person by their signature
              evidenced the acceptance of the duties,
              obligations and faithful performance of said
              Company.

          *        *       *        *       *       *       *

     3.       * * * However, in order to acquire a proper
              [employer identification] number, the Director
              hereby changes the name of The Adorno Business
              Company, by substituting the word “Trust” for the


     9
      (...continued)
     Q: You don’t know who Edward Bartoli is?

     A: I stand by my stipulations, Your Honor.
     10
        The first minutes here appear to be reproduced from the
first minutes of The Adorno Asset Management Trust (Adorno
Asset), which would explain the erroneous references to Adorno
Asset rather than Adorno Business. Cf. The Adorno Asset Mgmt.
Trust v. Commissioner, T.C. Memo. 2003-127. See infra note 12.
                                  - 12 -

              word “Company”. * * *

          *        *        *         *     *       *       *

                 /s/
     Edwin R. Adorno, Director

The first minutes do not list the name of a “trustee” for Adorno

Business nor make any reference to a “trustee”.

     The affidavit provides, in part, as follows:

     I, Edwin Adorno, * * * state as follows based on my
     personal knowledge:

     1.       I am trustee of the Adorno Asset Management Trust
              lawfully authorized to represent and act on behalf
              of Adorno Asset Management Trust.

          *        *        *         *     *       *       *

              10/17/02                         /s/
     Date:                         Edwin Adorno, Trustee
                                   Adorno Asset Management Trust

The affidavit does not list the name of a “trustee” for Adorno

Business nor make any reference to the purported trustee of

Adorno Business.

     Mr. Adorno also filed a supplemental objection with his

response stating that he is the “trustee” of Adorno Business and

attesting to his capacity and authority to act on behalf of

Adorno Business.       In addition, Mr. Adorno submitted a “motion to

vacate claims, motion for summary judgment and complaint under

authority of 26 U.S.C. 7433, 7214(a)” which the Court filed as a

Motion to Dismiss, challenging respondent’s authority to assess

tax against Adorno Business and stating that he is the trustee of
                                - 13 -

Adorno Business.11

     G.    Hearing on Respondent’s Motion

     This matter was called for hearing at the Court’s trial

session in Chicago, Illinois.12    Counsel for respondent appeared

at the hearing and offered argument and evidence in support of

respondent’s motion to dismiss.    Specifically, respondent

challenges the validity of all of the documents submitted by Mr.

Adorno and contends that these documents do not demonstrate that

Mr. Adorno has current representative capacity as trustee.    Mr.

Adorno appeared pro se, purportedly on behalf of Adorno

Business.13    Offering no evidence to supplement the previously

submitted documents, he asserted that “the minutes elected me as

director” and “I stand by my stipulations and affidavits that are



     11
           The Court denied Mr. Adorno’s motion by Order dated Nov.
6, 2002.
     12
        This case was called for hearing with a related case in
which Mr. Adorno also filed a petition purportedly on behalf of a
so-called trust, which case is also being dismissed on the ground
that it was not filed by a proper party. See The Adorno Asset
Mgmt. Trust v. Commissioner, T.C. Memo. 2003-127. Mr. Adorno
himself also has a case pending before the Court assigned docket
No. 9459-02.
     13
        We note that, at the beginning of the hearing, Mr.
Adorno appeared at counsel table with another individual by the
name of Lorenzo Fiol (Mr. Fiol), whom Mr. Adorno identified as
his accountant. The Court directed Mr. Fiol to sit in the
gallery behind counsel table. However, Mr. Adorno persisted to
disrupt the proceedings by communicating with Mr. Fiol over the
gallery railing whereupon the Court directed Mr. Fiol to sit in
the rear of the courtroom. See The Adorno Mgmt. Trust v.
Commissioner, T.C. Memo. 2003-127, note 13.
                                - 14 -

in the Court’s [sic]”.

     H.   Post-Hearing Memorandum Briefs

     At the conclusion of the hearing, the Court directed the

parties to file memorandum briefs in support of their respective

positions.   Respondent complied with this order, but Mr. Adorno

failed to do so.

Discussion

     According to respondent, Adorno Business failed to show that

Mr. Adorno is a proper party authorized to act on its behalf.

Respondent asserts that as a result, no valid petition has been

filed and the Court must dismiss this case for lack of

jurisdiction.   We agree.

     It is well settled that the taxpayer has the burden of

affirmatively establishing all of the facts giving rise to our

jurisdiction.   See Patz Trust v. Commissioner, 69 T.C. 497, 503

(1977); Fehrs v. Commissioner, 65 T.C. 346, 348 (1975); Wheeler’s

Peachtree Pharmacy, Inc. v. Commissioner, 35 T.C. 177, 180

(1960); Natl Comm. To Secure Justice v. Commissioner, 27 T.C.

837, 838-839 (1957).     Furthermore, unless the petition is filed

by the taxpayer, or by someone lawfully authorized to act on the

taxpayer’s behalf, we are without jurisdiction.    See Fehrs v.

Commissioner, supra at 348.

     Rule 60(a) requires that a case be brought “by and in the

name of the person against whom the Commissioner determined the
                               - 15 -

deficiency * * * or by and with the full descriptive name of the

fiduciary entitled to institute a case on behalf of such person.

See Rule 23(a)(1).”   Rule 60(c) states that 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 record shows that

Illinois State law is controlling in this case.

     Under Illinois law, only the trustee14 is authorized to

commence litigation on behalf of a trust.    760 Ill. Comp. Stat.

Ann. 5/4.11 (West 1992).15   In this respect, the Illinois Trusts

and Trustees Act does not grant the power to sue on behalf of a

trust to a director, a fiduciary, or any other legal

representative.   See Restatement, Trusts 2d, sec. 16A (1959)

(“The officers and directors of a corporation, although they are

fiduciaries, are not trustees.”).   In the present case, Adorno


     14
        For purposes of the Ill. Trusts and Trustees Act, see
760 Ill. Comp. Stat. Ann. 5/1 (West 1992), a “trust” means a
trust created by agreement, declaration or other written
instrument. 760 Ill. Comp. Stat. Ann. 5/2(1) (West 1992). Thus,
the Ill. Trusts and Trustees Act is applicable to a business
trust. See id. at 5/4.23. A “trustee” is defined as “the
trustee or any successor or added trustee of the trust, whether
appointed by or pursuant to the instrument creating the trust, by
order of court or otherwise”. 760 Ill. Comp. Stat. Ann. 5/2(2)
(West 1992).
     15
        See Pierce v. Chester Johnson Elec. Co., 454 N.E.2d 55,
57 (Ill. App. Ct. 1983) (trustees possess a specific statutory
power to sue in a representative capacity on behalf of a trust);
see also United States ex rel. Mosay v. Buffalo Bros. Mgmt., 20
F.3d 739, 742 (7th Cir. 1994) (“a trustee is the one who has the
legal right to sue”).
                               - 16 -

Business has failed to provide the Court with the documentary

evidence necessary to support its contention that Mr. Adorno is

its duly appointed trustee.

     As previously discussed, Adorno Business is purportedly an

irrevocable trust wherein The Adorno Asset Management Trust

(Adorno Asset) is the “Creator”/”Investor” and Mr. Adorno is the

“Acceptor”.16   According to the purported trust instrument, Mr.

Adorno was specifically designated “director” of Adorno Business.

However, no provision of the purported trust instrument appoints

or designates Mr. Adorno “trustee” for Adorno Business.   We find

it difficult to accept that the title “director” confers the

legal status of trustee on Mr. Adorno.   The purported trust

instrument does not define the term “director”, but it dictates

that the director comprises the “Board of Directors” to “exercise

collectively the exclusive management and control of The Adorno

Business Company property and business affairs”.   Further, the

purported trust instrument does not provide the director with the

authority to institute legal proceedings on behalf of Adorno

Business.17   The specific duties, powers, and responsibilities



     16
        We have serious doubts that the trust was validly formed
because Mr. Adorno lacked the requisite capacity to execute the
purported trust instrument on behalf of Adorno Asset. See The
Adorno Asset Mgmt. Trust v. Commissioner, T.C. Memo. 2003-127.
However, we assume arguendo that the purported trust instrument
is valid.
     17
          See 760 Ill. Comp. Stat. Ann. 5/4.11 (West 1992).
                                - 17 -

set forth in the purported trust instrument are associated with

the day-to-day management affairs of the business.    Thus, the

director’s responsibilities appear to be nothing more than those

of a business manager.

     Indeed, the first time Mr. Adorno claimed to be trustee for

Adorno Business was in his response dated October 17, 2002, to

the Court’s order for production of documents evidencing Mr.

Adorno’s capacity as the purported “trustee” of Adorno Business.

With the exception of the response, Mr. Adorno continually

referred to himself as director and signed all relevant documents

as director of Adorno Business.    Without clear evidence in the

purported trust instrument, we are unpersuaded that the term

“director” is synonymous with the term “trustee” to accord Mr.

Adorno the status of trustee.    Accordingly, we conclude that Mr.

Adorno is not the duly appointed trustee of Adorno Business

pursuant to Illinois law.

     In the absence of any persuasive basis for concluding that

Mr. Adorno was duly appointed as trustee for Adorno Business, we

shall dismiss this case for lack of jurisdiction consistent with

respondent’s motion.

     All of the arguments and contentions that have not been
                             - 18 -

specifically analyzed herein have been considered, but do not

require any further discussion.

     In order to give effect to the foregoing,

                                   An order of dismissal for

                              lack of jurisdiction will be

                              entered.
