That’s my view of Judge Travis A. (“Tag”) Greaves when it comes to deciding what’s a trust and what’s a foreign trust for Federal tax purposes. Judge Tag Greaves has a lot to say, all of it to the point, in Raju J. Mukhi, Docket No. 4329-22L, filed 5/30/25.

Raj’s trusty attorneys, whom I’ll call the Boxers and who show the fighting spirit of their namesakes, claim the offshore trust, yclept Sukhmani Gurkukh Nivas Foundation, which IRS alleges Raj ran, is a sham. Hence questions of fact, wherewith to stymie IRS’ motion for partial summary J that same is a foreign grantor trust and that the Section 6677 nonreportage chops were correctly computed.

Word to IRS: remember lawyers can’t add, and judges don’t like to. I don’t suggest asking a judge to do arithmetic or even enunciate mathematical principles.

Anyway, Judge Tag Greaves explains in subatomic detail why deciding what is a trust, and what is a foreign trust, for tax purposes are both fact-intensive.

“The four elements of a trust for federal tax purposes are (1) a grantor, (2) a trustee that takes title to property for the purpose of protecting or conserving it, (3) property, and (4) designated beneficiaries. See Treas. Reg. § 301.7701-4(a). Generally, we review the organizing documents to make these determinations.” Order, at p. 2. (Citation omitted.)

Except no one has put in, or sdtiped, the organizing documents into evidence. And even if the organizing documents were bulletproof, they’re meaningless if their effects on the parties’ actions don’t move the needle.

“In deciding whether to disregard a trust for federal income tax purposes, the Court considers four factors: (1) whether the taxpayer’s relationship to the property transferred to the trust materially changed after the trust’s creation; (2) whether the trust has an independent trustee; (3) whether an economic interest passed to other trust beneficiaries; and (4) whether the taxpayer feels bound by the restrictions imposed by the trust agreement or the law of trusts. In the event that a taxpayer seeks to disavow the form of the transaction, that taxpayer is held to an additional burden to show that the form of the transaction was not chosen for the purpose of obtaining tax benefits that are inconsistent with those the taxpayer seeks through disregarding that form.” Order, at pp. 2-3. (Citations omitted).

OK, but even if it is a trust, is if foreign?

“If a trust exists for federal income tax purposes, a taxpayer will only have a reporting obligation under section 6048 if the trust is a foreign trust and the taxpayer is the grantor or transferor of the trust. See § 6048(a)(3)(A) and (4). A foreign trust is ‘any trust other than a trust’ that is a ‘United States person’ (i.e., a domestic trust). See § 7701(a)(30)(E) and (31)(B); Treas. Reg. § 301.7701-7(a)(2). A trust is domestic if (1) ‘[a] court within the United States is able to exercise primary supervision over the administration of the trust’ and (2) ‘[o]ne or more United States persons have the authority to control all substantial decisions of the trust’. Treas. Reg. § 301.7701-7(a)(1). Failure to satisfy either test will result in the trust’s being deemed a foreign trust for federal tax purposes. See id. subpara. (2).

“Finally, a person may be deemed the grantor of a trust under the grantor trust rules of sections 671 through 679. See § 6048(b)(1). Section 679(a) provides that any United States person who directly or indirectly transfers property to a foreign trust shall be treated as the owner for his taxable year of the portion of the trust attributable to that property if for the year there is a United States beneficiary of any portion of the trust.” Order, at p. 3.

Here IRS is playing with few cards, some bank records and a couple trustee resolutions (hi, Judge Holmes). Not enough to tell if the trust is or what the trust is. As for disavowing the trust form of ownership, insufficient before-and-after evidence. Does disavowal move the tax needle? If not, who cares?

Hence no need for Judge Tag Greaves to do the numbers. Did I mention that lawyers can’t add and judges don’t like to?

The Boxers are ahead on points this round.