FINDINGS OF FACT
We summarize relevant background from Frank Sawyer II and set forth additional facts for purposes of deciding the issue on remand.
This case involves respondent’s efforts to collect tax and penalties assessed upon four C corporations. The corporations acknowledge that they owe the Federal Government a combined total of more than $24.3 million in tax and penalties. However, they have no money to pay. The Trust owned the corporations when they generated large capital gains, but it sold the corporations before the tax on the gains came due. The purchasing companies stripped the assets from the corporations before respondent could collect, and respondent now seeks to recover the tax and penalties from the Trust. The issue for decision is whether the Trust is liable to the IRS for the corporations’ unpaid tax and penalties.
The Trust held 100 % of the stock of the four C corporations--two taxi corporations and two real estate corporations. Carol S. Parks, as trustee, decided to sell the stock of the corporations to Fortrend International, LLC (Fortrend). The stock sale involved two steps. First, the corporations liquidated their assets and satisfied all of their nontax liabilities, leaving the corporations with nothing but cash and tax liabilities. Second, the Trust sold all of its stock in the corporations to various acquisition corporations Fortrend had formed (Fortrend acquisition vehicles).
Judge(s): Robert Goeke
Jurisdiction: U.S. Tax Court
Related Categories: Taxation
|Circuit Court Judge(s)|
|Petitioner Lawyer(s)||Petitioner Law Firm(s)|
|Respondent Lawyer(s)||Respondent Law Firm(s)|
|Kevin Croke||Internal Revenue Service|
|Yvonne Walker||Internal Revenue Service|