plaintiff rented similar premises on the open market for the same rent, the tax consequences would be the same as the result here if the plaintiff's deduction is upheld. Any reduction of the plaintiffs' taxes which resulted from this packaged business arrangement has been sanctioned by Congress in Sections 671-678 of the Internal Revenue Service of 1954 which allow creation of Clifford trusts as income-splitting devices. The government cannot prevail on its motion for summary judgment in its favor.
While the government has moved for summary judgment in its favor under the Perry and Van Zandt doctrines, it opposes plaintiffs' motion on the grounds that there are genuine issues of material fact. We find the issue of law to be controlled by the Brown decision in this circuit, and that as a matter of law the rent paid is a proper business deduction under Sec. 162. However, the government has questioned the reasonableness of the rental payments which plaintiff made to the trustee, and the independence of the trustee. Because there is nothing in the record on these points, they remain a material issues of fact to be determined by evidentiary hearing.
And now, this 19th day of September, 1975, this case having come before the court on cross-motions for Summary Judgment, it is ordered that (1) The Motion of the United States for Summary Judgment is denied; (2) The Motion of Plaintiffs for Summary Judgment is granted in part under Fed.R.Civ.P. 56(d) in that the payment of rent by a taxpayer for a professional office to an independent trustee under a trust created by the taxpayer under Sections 671-678 of the Internal Revenue Code is a proper business deduction under Sec. 162 of the Internal Revenue Code. The reasonableness of the rental paid and the independence of the trustee remain as issues of material fact to be determined on evidentiary hearing.
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