Esther Lafargue v. Commissioner of Internal Revenue

EUGENE A. WRIGHT, Circuit Judge.

This appeal involves taxation of a private annuity negotiated in an intrafamily arrangement with no arm’s-length bargaining. We affirm on the Tax Court’s reasoning, T.C.M. 1985-90, and we reject appellant’s meritless procedural challenges.

BACKGROUND

After inheriting a sizeable estate from her parents, LaFargue became concerned about property management. Desiring to provide for the economic security of herself and of her daughter Emily, she sought the advice of an attorney friend, Harry Margol-is.

He devised a two-step plan. First, a trust was created with a…