T.C. Memo. 2000-64
UNITED STATES TAX COURT
SCENIC WONDERS GALLERY, LLC, PHOTO ART MARKETING TRUST,
TAX MATTERS PARTNER, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 20509-98. Filed February 29, 2000.
John P. Wilde, for petitioner.
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.
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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, Scenic Wonders Gallery, LLC
(Scenic Wonders) was a limited liability company that is taxed as
a partnership because it did not make an election to be taxed as
a corporation. Scenic Wonders filed partnership income tax
returns, Forms 1065 (returns), for taxable years 1995 and 1996.
In those returns, it was indicated that there were two part-
ners/members of Scenic Wonders, i.e., Photo Art Publishing Trust
and Photo Art Marketing Ent. 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:
TAX MATTERS PARTNER
SCENIC WONDERS GALLERY LLC
PHOTO ART MARKETING ENTERPRISES
320 N 89A 14
SEDONA, AZ 86336
John P. Wilde (Mr. Wilde) timely mailed to the Court a
petition purportedly filed on behalf of Scenic Wonders. Mr.
Wilde identified himself in the petition as co-trustee of Photo
Art Marketing Trust. Mr. Wilde further represented in the
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.
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petition that Photo Art Marketing Trust is the tax matters
partner (TMP) for Scenic Wonders. Photo Art Marketing Trust was
formed under the laws of the State of Arizona.
Upon commencement of the examination of the returns filed by
Scenic Wonders for taxable years 1995 and 1996, respondent
requested complete copies of the trust documents relating to
Photo Art Marketing Trust, the purported TMP for Scenic Wonders,
documentation regarding those returns, the nature of the business
of Scenic Wonders, and the relationship of Scenic Wonders to its
alleged owners, as well as other items of substantiation.
Neither the trust documents nor the other documents and informa-
tion requested was provided to respondent.
Respondent’s motion contends in pertinent part:
15. * * * all of respondent’s records regarding
the TMP trust [Photo Art Marketing Trust] indicate an
entity named D & E Sword Company is the trustee. These
records are based upon representations made by the TMP
trust to respondent in correspondence, and in represen-
tations made by the TMP trust in its petition with this
Court in a related docketed case (Docket No. 16506-98).
16. Respondent’s counsel contacted the Arizona
Corporation Commission to determine the existence/
validity of the entity called D & E Sword Company. 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 Corpo-
ration Commission informed respondent’s counsel that it
had no record of any entity incorporated in Arizona
under the name of, or in reference to, an individual
named John P. Wilde.
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17. 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 the TMP
Trust.
18. Petitioner has provided no evidence that Mr.
Wilde’s appointment as Co-Trustee is valid or autho-
rized under the terms of the TMP trust indenture (as-
suming one exists).
* * * * * * *
20. * * * petitioner has failed to demonstrate
that John P. Wilde was legally appointed as Co-Trustee
authorized to act on behalf of the TMP trust and bring
the instant case before this Court. See T.C. Rule
60(c).
Petitioner filed an objection to respondent’s motion in
which it asks the Court to deny that motion. That objection
asserts in pertinent part:
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 [sic] are “Arizona
Trusts” [sic] * * *, 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 Petitioner need not remind the Court of
the consequences of taking any action over which sub-
ject 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 valid, then the Respondent will be barred by res
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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
[sic] are valid, then Mr. * * * [Wilde], under Arizona
Law, will be presumed to be the duly authorized
trustee, whether it is as a Trustee of a resulting
trust, constructive 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 jurisdic-
tion 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
hearing, Mr. Wilde appeared as trustee for Photo Art Marketing
Trust, the purported TMP of Scenic Wonders.2 Petitioner prof-
fered no evidence, and the parties presented no new arguments, at
that hearing.
Discussion
Rule 60 provides in pertinent part:
(c) Capacity: * * * The capacity of a fiduciary
or other representative to litigate in the Court shall
2
At the hearing, the Court informed Mr. Wilde that its
allowing him to appear at the hearing as the alleged trustee of
Photo Art Marketing Trust did not mean that the Court agreed that
he in fact was a duly appointed and authorized trustee of that
entity.
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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 Photo Art Marketing Trust,
the purported TMP of Scenic Wonders, is a trust organized under
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. 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. Commissioner, 27 T.C. 837, 839 (1957), by
establishing affirmatively all facts giving rise to our jurisdic-
tion, 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, petitioner
must provide evidence establishing that Mr. Wilde has authority
to act on behalf of Photo Art Marketing Trust, the purported TMP
of Scenic Wonders. 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 petitioner's position that under Arizona law the validity
of the purported appointment of Mr. Wilde as a trustee of Photo
Art Marketing Trust falls within the exclusive jurisdiction of
the courts of the State of Arizona.
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On the record before us, we find that petitioner has failed
to establish that Mr. Wilde is authorized to act on behalf of
Photo Art Marketing Trust, the purported TMP of Scenic Wonders.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
petitioner that are not discussed herein, and we find them to be
without merit and/or irrelevant.