Jerome D. And Bernetta O. Hanson v. Commissioner of Internal Revenue

Jerome and Bernetta Hanson, husband and wife, appeal a judgment of unpaid taxes and penalties. We affirm, substantially for the reasons set forth in Schulz v. Com missioner of Internal Revenue, 686 F.2d 490 (7th Cir.1982).

Jerome worked as an independent contractor selling insurance for State Farm Insurance Companies, and Bernetta was an instructor at a community college. On January 10, 1977, Jerome executed a declaration of trust creating the J.D. Hanson Trust. He used a set of trust forms, including the declaration, introductory materials, and step-by-step instructions for creating and maintaining a trust which he purchased from the Institute for Individual Religious Studies.

The declaration included the following provisions: Jerome transferred the family residence to the trust. The trustees were empowered to pay reasonable compensation to officers, employees and agents of the trust and to themselves. The trust was divided into 100 beneficial interest units. The owner of a beneficial unit was entitled to a pro rata share of any distribution of income from the trust and to a pro rata share of the corpus upon liquidation, but was not entitled to participate in the management of…