Funes

BACKGROUND

Larry and Marie’s parents (the grandparents) established separate trusts for the benefit of their children and transferred certain real properties to those trusts. The grandparents also formed Pinnacle, Inc. (Pinnacle). The properties held in the trusts were then transferred to Pinnacle, which issued stock in equal amounts to each trust. Chelsea became the beneficiary of the trust established for Marie’s benefit upon Marie’s death. Larry became the successor trustee of the trusts in 2006. He was also president of Pinnacle. Chelsea was not involved in managing the trust established for Marie’s benefit and was not a shareholder, officer, or director of Pinnacle. Nevertheless, there were disputes between Chelsea and Larry regarding Larry’s management of Pinnacle and the trusts. Attorneys negotiated a settlement of Chelsea and Larry’s disputes in mid-2018 through March 2019. Ashley, a certified public accountant, assisted Larry with issues

2 related to the settlement, and she talked to Chelsea about the potential tax consequences of proposed distributions. Chelsea and Larry executed a settlement agreement on April 8, 2019. Paragraph 1 of the agreement provided that Larry,…