                         T.C. Memo. 2000-65



                       UNITED STATES TAX COURT



 PHOTO ART MARKETING TRUST, JOHN P. WILDE, CO-TRUSTEE, AND PHOTO
ART PUBLISHING TRUST, JOHN P. WILDE, CO-TRUSTEE, Petitioners v.
           COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 20582-98.                 Filed February 29, 2000.



     John P. Wilde, for petitioners.

     David W. Otto and Doreen M. Susi, for respondent.



                         MEMORANDUM OPINION


     CHIECHI, Judge:    This case is before the Court on respon-

dent'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, each petitioner was a trust

organized under the laws of the State of Arizona and was engaged

in business in that State.

     Upon commencement of the examination of each petitioner’s

taxable years 1995 and 1996, respondent requested that each

petitioner provide respondent with complete copies of the trust

documents relating to each such petitioner as well as other items

of substantiation.   Each petitioner refused to provide respondent

with the trust documents and other information requested.

     At the time respondent issued the notice of deficiency

(notice) to each petitioner, respondent’s address records indi-

cated an entity named D & E Sword Co. as the trustee for each

petitioner.   Respondent’s address records were not based on any

trust documents or other legal documents submitted by each

petitioner that could constitute credible evidence regarding who

was/is the trustee of each petitioner.    Instead, respondent’s

address records were prepared and updated in accordance with

respondent’s procedures and were based solely on correspondence

submitted by each petitioner which alleged that D & E Sword Co.

was the trustee for each petitioner.
                                 - 3 -


     The notice issued to petitioner Photo Art Marketing Trust

was addressed as follows:

     PHOTO ART MARKETING TRUST
     SWORD D & E CO-TTES
     P.O. BOX 4047
     SEDONA, AZ 86340-4047 473

The notice issued to Photo Art Publishing Trust was addressed as

follows:

     PHOTO ART PUBLISHING TRUST
     D & E SWORD TRUSTEE CO TTEE
     P.O. BOX 4047
     SEDONA, AZ 86340-4047 473

     Photo Art Marketing Trust and Photo Art Publishing Trust

jointly filed a petition in this Court.    That petition was signed

on behalf of Photo Art Marketing Trust and Photo Art Publishing

Trust by John P. Wilde (Mr. Wilde), as “co-Trustee of Photo Art

Marketing Trust and Photo Art Publishing Trust”.

     Respondent’s motion contends in pertinent part:

          7. Arizona law provides that the trustee has the
     capacity to institute court proceedings on behalf of
     the trust. A.R.S. § 14-7233 C. 25. However, Mr. Wilde
     has not demonstrated with credible evidence that he is
     a Co-Trustee of the [petitioner] trusts with capacity
     to bring the instant action.

        *       *       *         *       *      *       *

          11. Moreover, respondent’s counsel contacted the
     Arizona Corporation Commission to determine the exis-
     tence/validity of the entity called D & E Sword Com-
     pany. The Corporation Commission informed respondent’s
     counsel that it had no record of any entity by that
     name ever existing in the State of Arizona. Further,
     the Corporation Commission informed respondent’s coun-
     sel that it had no record of any entity incorporated in
                              - 4 -


     Arizona under the name of, or in reference to, an
     individual named John P. Wilde.

          12. There is absolutely no evidence from which
     the Court can adduce that there has been a legal as-
     signment of John P. Wilde as the Co-Trustee of either
     of the petitioner trusts.

          13. Petitioners have provided no evidence that
     Mr. Wilde’s appointment as Co-Trustee is valid or
     authorized under the terms of the trust indentures
     (assuming they exist).

          14. At a minimum, petitioners should be required
     to provide complete copies of the original trust docu-
     ment(s) wherein the initial trustee is appointed.
     Petitioners should also provide any and all documents
     in the chain of appointments of subsequent trustees.
     If the initial trustees or any successor trustees
     thereafter were, in fact, an entity called D & E Sword
     Company, petitioners should be required to produce
     credible evidence establishing legal existence and
     validity of that entity.

          15. Without the evidence described above in
     paragraph 14., petitioners have failed to demonstrate
     that John P. Wilde was legally appointed as Co-Trustee
     authorized to act on behalf of the trusts and bring the
     instant case before this Court. See T.C. Rule 60(c).

     Petitioners filed a response to respondent’s motion in which

they ask the Court to deny that motion.   Petitioners’ response to

respondent’s motion asserts in pertinent part:

          3. The Respondent’s objection goes to the manage-
     ment of the trusts, their internal affairs, concerns
     about their administration, the declaration of rights
     and the determinations of matters involving the trust-
     ees. As the Respondent concedes that these are “Ari-
     zona Trusts” * * *, this issue falls within the exclu-
     sive 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. Wilde [is] the duly authorized
     Trustee. The Petitioners need not remind the Court of
                              - 5 -


     the consequences of taking any action over which sub-
     ject matter jurisdiction 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 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 valid, then Mr. Wilde, under Arizona Law, will be
     presumed to be the duly authorized trustee, whether it
     is as a Trustee of the resulting trust, constructive
     trust or expressed [sic] trust. Therefore, the only
     course available to this Court is to defer consider-
     ation 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 inter-
     twined with the merits.” (Emphasis added))

     The Court held a hearing on respondent’s motion.    At that

hearing, Mr. Wilde appeared on behalf of petitioners.1   Petition-




     1
      At the hearing the Court informed Mr. Wilde that its allow-
ing him to appear at the hearing as the alleged co-trustee of
each petitioner did not mean that the Court agreed that he in
fact was a duly appointed and authorized co-trustee of each
petitioner.
                                 - 6 -


ers proffered no evidence, and the parties presented no new

arguments, at that hearing.

                              Discussion

     Rule 602 provides in pertinent part:

          (a) Petitioner: (1) Deficiency or Liability
     Actions: A case shall be brought by and in the name of
     the person against whom the Commissioner determined the
     deficiency (in the case of a notice of 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). A case timely brought
     shall not be dismissed on the ground that it is not
     properly brought on behalf of a party until a reason-
     able time has been allowed after objection for ratifi-
     cation by such party of the bringing of the case; and
     such ratification shall have the same effect as if the
     case had been properly brought by such party. * * *

         *        *       *        *       *       *       *

          (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 parties do not dispute that each petitioner is a trust

organized under the laws of, and doing business in, the State of

Arizona.     Under Arizona law, see Rule 60(c), a trustee has the

power to commence litigation on behalf of a trust.     See Ariz.

Rev. Stat. Ann. sec. 14-7233.C.25. (West 1995).     In the instant

case, each petitioner has the burden of proving that this Court

has jurisdiction, see Fehrs v. Commissioner, 65 T.C. 346, 348



     2
      All Rule references are to the Tax Court Rules of Practice
and Procedure.
                                 - 7 -


(1975); National Comm. to Secure Justice in the Rosenberg Case v.

Commissioner, 27 T.C. 837, 839 (1957), by establishing affirma-

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

Peachtree 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, each petitioner must

provide evidence establishing that Mr. Wilde has authority to act

on its behalf.   See National Comm. to Secure Justice in the

Rosenberg Case v. Commissioner, supra at 839-840; Coca-Cola

Bottling Co. v. Commissioner, 22 B.T.A. 686, 700 (1931).       We

reject petitioners' position that under Arizona law the validity

of the purported appointment of Mr. Wilde as co-trustee of each

petitioner falls within the exclusive jurisdiction of the courts

of the State of Arizona.

     On the record before us, we find that each petitioner has

failed to establish that Mr. Wilde is authorized to act on its

behalf.3

     To reflect the foregoing,

                                         An order of dismissal for lack

                                 of jurisdiction granting respon-

                                 dent’s motion will be entered.



     3
      We have considered all of the contentions and arguments of
petitioners that are not discussed herein, and we find them to be
without merit and/or irrelevant.
