T.C. M em o . 2 0 1 9 -4 7

UNITED STATES TAX COURT

NORM AN HINERFELD, Pet it io n er v . COM M ISSIONER OF INTERNAL REVENUE, Res po n d en t

Do ck etNo . 4 8 7 9-1 5L. Fi l edM ay 2 , 2 0 1 9
.
R's Ap p eal s Offi ce (Ap p eal s ) reject edP's o ffer t o s et t l e h i s l i ab i l i t y fo r t ru s tfu n d reco v ery p en al t i es b ecau se i td i dn o trefl ectth e v al u e o f h i s res id en ce, L, t i t l e t o wh i ch h e h adp rev i o u s l y tran s ferred t o h i s wi fe, W
. Hel d : Up h ol d i n g a d et erm i n at i o n b y Ap p eal s th atl ack s an ad equ at e ex p l an at i o n d o es n o tv i ol at e t h e d o ctri n e o f SEC v
. Ch en ery Co rp ., 3 1 8 U.S. 8 0 (1 9 4 3 ), wh en th e fai lu re o f ex pl an at i o n rel at es t o a l eg al i s s ue rat h er t h an a m at t er co m m it t edt o t h e ag en cy 's d i s cret io n . Hel d , fu rt h er, b ecau s e (1 ) P fai l edt o es t ab l i s h edth atW p ai d ad equ at e co n s i d erat i on fo r L, (2 ) t he reco rdd em o n st rat es , o r p ro v i d es g ro u n d s fo r i nferri n g , th atP tran s ferred L t o W t o p ro t ecti tfro m

h is cred it o rs , an d (3 ) P fai ledt o d em o n s t rat e an y res p ecti n wh i ch the tran s fer o f L affect edh i s u s e o r en jo ym en to f t h e p ro pert y , W can ap p ro p ri at el y

b e t reat edas h o l d i n g t i tl e t o L as P's n o m i n ee; acco rd i n g l y , R's s et t l em en t o ffi cer d i d n o tab u s e h er d i s cret i o n i n reject i n g an o ffer-i n -co m p ro m i s e t h atd i dn o t refl ectL's v al u e.-2
-

[* 2 ] Ri ch ardS. Kes t enb au m , Sco ttL. Kes t en b au m , an dBern ardS. M ark , fo r p et i t i o n er. M i ch ael J . De M at o s , fo r res p o nd en t .

M EM ORANDUM OPINION HALPERN, Ju d g e: Th i s cas e i s b efo re u s fo r rev iew o f a d et erm i nat i o n b y th e In t ern al Rev en u e Serv i ce (IRS) Ap p eal s Offi ce (Ap p eal s ) t o s u st ai n t h e fi l i n g
o f a n o ti ce o f Fed eral t ax l i en (NFTL) co n cern i n g tru s tfu n dreco v ery p en al t i es (TFRPs ) as s es s edag ai n s t p et i t io n er u n d er s ect i o n 6 6 7 2 1 i n reg ardt o u npai d
em pl o y m en tt ax es o f Th erm aco n In du s t ri es , In c. (Th erm aco n ), fo r th e quart ers
en d edSep t em

b er 3 0 an dDecem

b er 3 1 , 2 00 2 , M arch 3 1 , Sep t em b er 3 0 , an d Decem b er 3 1 , 2 0 03 , an dM arch 3 1 an d J un e 3 0 , 2 0 0 4 (qu art ers i n i s s u e). Befo re h i s res ig n at i o n i n 2 0 03 , p et i t i o n er h adb een ch ai rm an o f Th erm aco n . W e m u s t d eci d e wh et h er Ap p eal s ab u sedi t s d i s cret i o n i n reject i n g p et i t i o n er's o ffer t o s et t l e fo r $ 1 2 ,7 2 0 l i ab i l it i es th atex ceed ed$ 5 5 0 , 0 0 0 wh en res p o n d en ti s s u edth e NFTL
an d rem ai n edal m o st$ 3 0 0 , 00 0 atth e t i m e o f t ri al
.

1 Al l s ect i o n referen ces are t o th e In tern al Rev en u e Co d e o f 1 98 6 , as am en d edan di n effect atal l rel ev an tt i m es , an dal l Ru l e referen ces are t o th e Tax Co u rtRu l es o f Pract i ce an dPro cedu re, u n les s o t h erwi s e i n di cat ed
.-3
-

[* 3 ] Back gro u n d Th e Larch m o n tRes i d en ce Si n ce 1 9 6 8 , p et i t i o n er an dh i s wi fe h av e res i d edi n a h o u s e l o cat edi n Larch m o n t , New Yo rk(Larch m o n tres i d en ce). In Feb ru ary 2 0 0 3 , p et i t i o n er
ex ecu t eda d eedb y

wh i ch h e t ran s ferred t i t le t o th e Larch m o n tres id en ce t o M rs . Hi n erfel d . Th e d eeds t at es th atp et i t i o n er m ad e th e t ran s fer " i n co n s i d erat i o n o f t en ($ 1 0 .0 0 ) d o l l ars p ai db y * * * [M rs . Hi n erfel d ] " . Th e p art i es s ti p u lat edth e d eed to b e a qui tcl ai m

d eed . Aft er t ran s ferri n g th e Larch m on tres id en ce t o h i s wi fe, p et i t i on er co n t i nu edt o p ay atl eas ts o m e o f th e ex p en s es o f m ai n t ai n i n g th e p ro p erty . M rs . Hi n erfel d 's Paym en t s t o Fi n an ci al In s t i tut i o n s Bet ween M arch 2 00 2 an dNo vem ber 2 0 0 3 , M rs . Hi n erfel d m ad e p aym en t s t o v ari ou s fi n an ci al i ns t itu t i o n s t o t al i n g $ 5 m i l l io n . Th e d at es an dam ou n ts o f th o s e p aym en t s are as fo l lo w s : Dat e A m o u n t Pay ee 3 / 1 5 /0 2 $ 3 00 ,0 0 0 Co m m erce Ban ko f PA NA 1 1 / 2 0 /0 2 7 50 ,0 0 0 Fl eetNat i o n al Ban k 1 / 2 8 /0 3 1 ,1 00 ,0 0 0 LaSal l e Bu s i n es s Cred i t , LLC 1 / 2 8 /0 3 4 00 ,0 0 0 LaSal l e Bu s i n es s Cred i t , LLC 1 1 / 7 /0 3 8 50 ,0 0 0 LaSal l e Bu s i n es s Cred i t , LLC-4
-

1 1 / 7 /0 3 9 00 ,0 0 0 LaSal l e Bu s i n es s Cred i t , LLC 1 1 / 7 /0 3 7 00 ,0 0 0 LaSal l e Nat io n al Ban k As s es s m en to f Tru s t Fu n dReco v ery Pen al t i es , th e Pri o r Lev y No t i ce, an d Hi n erfel dI Res p o n d en tas ses s edp et i t i o n er's TFRP l i ab i l i t i es fo r t h e qu art ers i n i s s u e b et ween Feb ru ary

an dM ay 2 0 0 6 . Th e fo l l o wi n g J u n e, res p o n d en t n o t i fi ed p et i t i o n er o f h i s i n t en t io n t o co l l ectth o se l i ab il i ti es b y l ev y . 2 InHi n erfel d v . Co m m i s s i o n er (Hi n erfel dI), 1 3 9 T.C. 2 7 7 (2 0 1 2 ), we co n s i d ereda p et i t io n t o
rev i ew Ap p eal s ' d et erm in at i o n t o s u s t ai n th e p ro p os edl ev y . Hi n erfel d I p res en t ed two i s s u es fo r o u r d eci s i o n : (1 ) wh et h er Ap peal s an darea co u n s el i n the Sm al l Bu s i nes s/ Sel f-Em

pl o y edDi v i s i o n o f t h e Offi ce Ch ief Co un s el h aden g ag edi n p ro h ib i t edex p art e co m

m u n i cat i o n s du ri n g th e co l l ect i o n du e p ro ces s (CDP) h eari n g co n cern i n g th e 2 0 0 6 l ev y n o t i ce an d (2 ) wh et h er Ap p eal s h adab u s edi t s d i s cret i o n i n reject i ng p et i t i o n er's o ffer t o s et t l e h i s l i ab il i ti es fo r $ 7 4,8 5 7 . W e
res o l vedb o t h i s su es i n res p o n d en t 's fav o r. [* 4 ]

2 Th e 2 0 06 l ev y

n o t i ce co v ered al l o f t h e qu art ers i n i s su e o t h er t h anth e qu art er en d edM arch 3 1 , 2 0 0 4
. See Hi n erfel dv . Co m m i s s i o n er (Hi n erfel dI), 1 3 9 T.C. 2 7 7 , 2 7 7 (2 0 1 2 ).-5
-

[* 5 ] Th e NFTL; Pet i t i o n er's In i t i al CDP Heari n g In J u l y 2 0 1 3, res p o n den ti s s u edt o p et i t i o ner an NFTL reg ard i n g am o u n t s
as s es s edu n d er s ect io n 6 6 7 2 fo r t h e qu art ers i n i s s u e. InAu gu s t 2 0 1 3, p et i t i o n er req u es t eda CDP h eari n g i n reg ardt o th e NFTL. Th atreq u es treferred t o a p en di n g o ffer p et i t i o n er h adm ad e t o s et t l e h i s TFRP l i ab il i ti es b utrai s edn o o t h er i s su es . Inp art i cu l ar, p et i ti o n er d i dn o td is p u te h i s TFRP l i ab i l i t i es . In Ap ri l 2 0 1 4 , b efo re p et i t i o n er's i n i t i al CDP h eari n g, Set t lem en tOffi cer (SO) M ari lyn M at t hews rev i ewedth e d eedb y wh i ch p et i t i o n er t ran s ferred t i t l e t o th e Larch m o n tres i d en ce t o h i s wi fe. Th e co p y o f t h e d eedi n cl u d edi n t h e reco rd b ears n o ev i d en ce o f h av i ng b een reco rd ed
. In Oct o b er 2 0 14 , p et i t i o n er's at t o rn ey , Ri ch ardKes t en b au m , s en tSO M at th ews a co p y

o f an affi dav i tp et i t i o n er h adg i v eni n Hi n erfel dI i n wh i ch h e
s t at ed : " Inex ch an g e fo r t h e d eed[t o th e Larch m o n tres i d en ce] , m y wi fe p ai do ff
m y b an k g u aran tees o f $ 3 0 0,0 0 0 .0 0 t o Co m m erce Ban kan d$ 7 50 ,0 0 0
. 0 0 t o Fl eet Ban k" . Th e fo l l owi n g m o n t h , aft er t h e i n i ti al CDP h eari n g , M r. Kes t en b au m s en t SO M at th ews an o th er l et t er th ati d en t i fi edwh ol l y d i fferen tp aym en ts as th e
co n si d erat io n . Aft er cl ai m in g th at" M rs . Hi nerfel d p ai ds ub s t an t i al co n si d erat i o n fo r t h e d eedtran s fer" , M r. Kes t en b au m el ab o rat ed : " [A] m o n g o t h er p aym en t s , M rs . Hi n erfel ds at i s fi ed d eb t s o f h er h u s b an dt o LaSal l e Ban ki n th e am o u n to f-6
-

[* 6 ] $ 8 3 0 ,0 0 0.0 0 an d$ 7 0 0 , 0 0 0 .0 0 * * * an dth en p ai dap p ro xi m at el y $ 1 ,0 0 0 ,0 0 0 .0 0 t o s at i s fy t h e m o rt g ag e o n th e s ub jectp rem i s es ." No t ice o f Det erm i n at i o n In a n o t ice o f d et erm in at i o n i s s u ed i n J an u ary 2 0 15 , Ap p eal s s u s tai n edth e NFTL fi l i n g . Th e n o t i ce o f d et erm i n at i o n ackn o w led g ed p et i t io n er's $ 1 2 ,7 2 0
o ffer-i n -co m

p ro m i se (OIC) b u ts t at edthatAp p eal s co u l d n o tco n s i d er an OIC as a
co l l ect i o n al t ern at i v e b ecau s e t h e fi n an ci al i nfo rm at i o n p et i t io n er p ro v i d ed i n d i cat edth ath e h ads u ffi ci en tas s et s t o s at i s fy h i s l i ab i li t ies . Inp art i cu l ar, Ap p eal s " d et erm i nedthatthe t ax p ay er m ai nt ai ns a 5 0 % i n t eres ti n th e p ri m ary
res i den ce an d t h ath i s wi fe d o es n o tm eetth e requ i rem en ts o f a p urch as er
acco rd i n g t o In t ern al Rev en u e Co d e 6 3 2 3 (h )(6 )." Ap peal s i nt erp ret edth e d eedb y wh i ch p et i t i on er t ran s ferred th e Larch m o n tres i d en ce t o h i s wi fe as i n d i cat i n g that h e m ad e t h attran s fer " fo r n o co n s id erat i o n." Th e n ot i ce o f d et erm i n at io n fu rt h er
s t at es th at" [t ] h e d eedwas qu i t cl ai m edwh i l e * * * [Th erm aco n 's em p l o y m en t t ax es ] were accru in g "
. Rem an d Aft er p et i ti on er p et it i o n edth i s Co u rtfo r a rev i ew o f Ap p eal s ' d et erm i n at i o n , res p o n d en t m o v edt o rem an dthe cas e t o Ap p eal s fo r reco n s id erat i o n o f p et i t i o n er's OIC. Res p o n d en tackn o wl ed g edth atSO M at t h ews ' an al y s is " reg ard i n g M rs .-7
-

[* 7 ] Hi n erfel d 's s t atu s as a 'p u rch as er' u n d er I.R.C. § 6 3 2 3(h )(6 ) was a m i s t ak e o f l aw." M rs . Hi n erfel d 's s t atu s as a p u rch as er wo u l dh av e b een rel ev an tt o t h e qu es ti o n o f wh et h er h er i n t eres ti n th e Larch m o n tres id en ce was s ub jectt o an y p reex i s t in g t ax l i en o n th e p ro pert y . Bu tres p o n d en td i dn o tas s es s p et it i o n er's TFRPs u nt i l aft er p et i t i o n er h adtran s ferred th e Larch m o n tres i d en ce t o h i s wi fe. Th erefo re, as res p o n d en tackn o wl ed g edi n h i s m o t i o n t o rem an d , " t h ere was n o l i enat th e t i m e t h e Larch m on tp ro p ert y was tran s ferred ." W e t h u s g ran t ed
res p o n d en t's m o t i o n . Co n fl i ct i n g Ex p l an at i o n s o f Co n s i d erat i on Aft er o u r rem an d o f t h e cas e, p et i t i o ner an d h i s at t o rn ey co n t i n u edt o m ak e
co n fl i ct i n g cl ai m s ab o utth e co n s i d erat i o n M rs . Hi n erfel dal l eg ed l y p ai dfo r t h e Larch m o n tres i d en ce. Duri n g a M arch 2 0 1 6 m eet i n g wi t h Ap peal s , p et i ti o n er d i s av o wed t he cl ai m s h i s at t o rn ey h adm ad e i n h is No v em

ber 2 01 4 l et ter t o SO M at th ews . Atth atm eet in g , p et i t i on er cl ai m edth atM rs . Hi n erfel d 's p aym en t s t o th e LaSal l e en ti t i es i n No vem b er 2 0 0 3 h adn o t h i ng t o d o wi t h th e t ran s fer o f t h e Larch m o n tres i d en ce. In s t ead , p et i t io n er cl ai m edth at M rs . Hi n erfel d h adm ad e a
s ep arat e p aym en to f $ 1 m i ll i on o n t h e d at e o f t he d eed . Inres p o n se, Ap peal s g av e p et i t i o n er t wo week s t o p ro v i d e d o cu m en t at i o n o f t he al leg ed$ 1 m i l l i o n p aym en t .-8
-

[* 8 ] Pet i t i o ner l at er ad m i t t edi n a l et t er t o SO M at t h ews th at" [t ] h ere was n o 'm i l li o n d o l l ar ch eck '." In the m ean t i m e, M r. Kes t en bau m s en tSO M at t h ews a l et t er i n wh i ch h e rev ert edt o h i s o ri gi n al cl ai m . " In p aym en tfo r t h e equ i t y i n th e
s ub jectp ro p erty ," M r. Kes t en b au m al l eg ed , " M rs . Hi n erfel d , o n M arch 1 5 , 2 0 0 2 , p ai dth e s u m

o f $ 30 0 ,0 0 0 .0 0 t o s at i s fy M r. Hi n erfel d ' s l i ab il i ty

t o Co m m erce Ban k." " In ad di t i o n ," M r. Kes t en b au m ad d ed , " o n No v em

ber 2 0 , 2 0 0 2 , i n fu rt h er p aym en t fo r t h e eq u i t y

i n th e res i d en ce, M rs . Hi n erfel dt en d ereda l et t er o f cred i t t o Fl eetNat i o n al Ban ki n th e am o u n to f $ 75 0 ,0 0 0.0 0 t o s at is fy M r. Hi n erfel d 's
o b l i g at i o n t o Fl eet ." (Pet i t i o ner's s ub seq u en t l et t er t o SO M at t h ews m ad e t h e s am e cl ai m .) Sup p l em en t al No t i ce o f Det erm i n at i o n In th e s up p l em en t al n o t i ce o f d et erm i n at i o n (s up p l em en tal n o t i ce) i ti s s u ed t o p et i ti o n er, Ap p eal s s t at edth ati tco u l d n o t co n s i d er an OIC as a co l l ect i o n al t ern at i v e b ecau s e h e " h as s u ffi ci en tequ i t y i n as s et s t o s at i s fy th e l i ab i l i t i es " . In reach i n g th atco ncl u s i o n , SO M at t h ews treat edth e Larch m on tres id en ce as an
as s et av ai l ab l e t o s at is fy

p et i t i o n er's l i ab i l i t i es o n t h e g ro u n d t h atM rs . Hi nerfel d-9
-

[* 9 ] h el dthatp ro p ert y

as p et i t io n er's n o m i n ee. SO M at t hews b as edh er an al y s i s
o n In tern al Rev en u e M an u al (IRM ) p t . 5 .1 7
. 2 .5 .7 .2 (3 ) (J an . 8 , 2 01 6 ). 3 Th e s up p lem en t al n o t i ce d o es n o tex p lai n i n an y d et ai l SO M at t h ews ' ap p li cat io n o f t h e fact o rs l i s t edi n th e IRM . In s t ead , i ts t at es o n l y : " M o s to r al l o f th e fact o rs l i s t edi n * * * In tern al Rev en u e M an ual s ect i on 5 .1 7 .2 .5 .7 .2 th atare
u s ed to d et erm in e i f a n o m in ee s i tu at i o n ex i s t s are p res en ti n th i s cas e."

3 In t ern al Rev en u e M an u al (IRM ) p t . 5 .1 7
. 2
. 5 .7 .2 (3 ) (J an . 8 , 2 0 1 6 ) s t at ed : No o n e fact o r d et erm i n es wh et h er a n om i n ee s i tu at i o n i s p res en t , b u ta n u m

b er o f fact o rs t ak en t o g ether m ay . Th e fo ll owi n g l i sti s n ei t h er ex h au s t i v e n o r ex cl us i v e, b u tn o m i nee s itu at i o n s ty p i cal l y i n v ol v e o n e o r m o re o f t h e fo l l o w i ng : (a.) Th e t ax p ay er p rev i o u s l y o wn edthe p ro p ert y . (b .) Th e n om i n ee p ai dl it t le o r n o co n s id erat i o n fo r t h e p ro p ert y . (c.) Th e t ax p ay er ret ai n s p o s ses s i o n o r co n t ro l o f t h e p ro p ert y . (d .) Th e t ax p ay er co n t i n u es t o u s e an den jo y th e p ro p ert y co n vey edju s tas the t ax p ay er h adb efo re s u ch co n v ey an ce. (e.) Th e t ax p ay er p ay s al l o r m o s to f t he ex p en s es o f th e p ro p ert y . (f.) Th e co n v ey an ce was fo r t ax av o i d an ce p urp o s es .-1 0
-

[* 1 0 ] Th e s up p lem en t al n o t i ce s t at es rep eat ed l y th atth e tran s fer o f t i t l e t o th e Larch m o n tres i d en ce o ccu rred wh i l e Th erm aco n's em pl o ym en t t ax es were
accru i n g . Tri al Tes t i m o ny Acco rd i ng t o M rs . Hi n erfel d ' s t es t i m o n y attri al , h er ag reem en tt o p ay p et i t i o n er's l i ab i li t i es aro s e fro m h i s i n t eres t i n p l aci n g a s eco ndm o rt g ag e o n th e h o u s e t o p ay

th o s e l i ab i l i t i es . M rs . Hi n erfel dex p res s ed co n cern ab o utl o s i n g th e h o u s e an do ffered t o g iv e h im th e fu n d s t o rep ay

th e l i ab i l i t i es an dth ereb y av o i d fu rt her en cu m

b eri n g th e res i d en ce. In ex ch an g e, s h e s ai d , s h e as k edth att it l e t o th e h o us e b e t ran s ferred t o h er n am e t o p ro t ecti t fro m p et i t i o n er's cred i t o rs . M rs . Hi n erfel dackn o wl ed g edth atthe p aym en t s s he cl ai m edt o h av e m ad e as
co n si d erat io n fo r t h e h o us e were m ad e b efo re ex ecu t io n o f t h e d eed . Wh en as k ed wh y , s he s ai d , " W el l , I h adt o wai tfo r i t b u tth atwas m y qu i d p ro qu o . I g etth e h o u s e an dI wi l l p ay

y o u r l o an s." In h i s o wnt es t i m o n y

attri al , p et i t i o ner at t ri b u t edth e d el ay i n ex ecu ti o n o f th e d eed t o h i s at t o rn ey 's b u s y s ch edu l e. Pet i t i o n er al s o t es t i fi edth ath e was
u n aware o f Th erm aco n 's u np ai dem p l o ym en tt ax es u n t i l 2 0 06 , wh en h e was ap p ri s edo f Th erm aco n 's l i ab i l it i es b y t he co rp o rat i o n 's t h en o wn er.-1 1
-

[* 1 1 ] Di s cu ss i o n I. Ap p li cab l e St atu t o ry Pro v i s i o n s Sect io n s 6 3 2 0 an d6 3 3 0 p ro v i d e a t ax p ay er t he ri g h tt o n ot i ce an dth e
o p p o rtu ni t y

fo r anAp peal s h eari n g b efo re t h e Co m m i s s i on er can co l l ectu np ai d t ax b y m ean s o f a l i en o r l ev y

ag ai n s tth e t ax p ay er's p ro p ert y . If a t ax p ay er req u es t s a CDP h eari n g, t he Ap p eal s o ffi cer co n du ct i n g the h eari ng m u s tv eri fy th atth e requ i rem en t s o f an y ap p l i cab l e l aw o r ad m i n i s t rat i ve p ro cedure h av e b een
m et . Secs . 6 3 20 (c), 6 3 3 0 (c)(1 ). Th e t ax p ay er m ay rai se atth e h eari n g an y rel ev an t i s s u e rel at in g t o th e u np ai d t ax o r th e co l l ect i o n act i o n , i n cl u di n g ap p ro p ri at e s p o u s al d efen s es , ch al l en g es t o th e ap p ro p ri at en es s o f co l l ect i o n act i on s , an d o ffers of co l lect i o n al t ern at i v es . See s ec. 6 3 3 0 (c)(2 )(A). Sect i o n 6 3 3 0 (d )(1 ) al l ows a t ax p ay er t o " ap p eal * * * t o th e Tax Co u rt " a d et erm i n at i o n
u n d er s ect i o n 6 3 2 0 o r 6 3 3 0
. Al th ou g h p et i t i o n er cl ai m s t o h av e res i g n edfro m Th erm aco n i n 2 0 0 3 an d t o h av e b een u n aware o f t h e co rp o rat i o n 's u np ai d em p l o ym en tt ax es u n ti l 2 00 6 , h e d o es no td is p u t e h i s l i ab i l i t y u n d er s ect i o n 6 6 7 2 (a) fo r Th erm aco n 's u np ai d-1 2
-

[* 1 2 ] em p lo ym en t t ax es fo r the q u art ers i n i s s u e. 4 Pet it i on er arg ues o n l y th atSO M at th ews ab us ed h er d i scret i o n i n reject i n g h i s OIC. Sect io n 7 1 2 2 (a) g i v es th e Co m m is s i o n er t h e d i scret i o n t o co m pro m i s e
u np ai dt ax l i ab i l i t i es . Sect io n 3 0 1 .7 1 22 -1 (b )(2 ), Pro ced
. & Ad m i n . Reg s ., l i s t s d o ub tas t o co ll ect i b il i ty

as a v al i dg ro u n d fo r co m p ro m i s i ng an u np ai dl i ab i l i t y .

" Do ub tas t o co l l ect i b i li t y ex i s ts i n an y cas e wh ere t h e t ax p ay er's as s et s an d i n co m e are l es s t h an th e fu l l am o u n t o f t h e l i ab i l i t y ." Id . Gen eral l y , u n der t h e Co m m i s s i o n er's ad m in i s t rat i ve g u i d el i n es , Ap p eal s wi l l accep ta t ax p ay er's OIC as
a res u l to f d o ubtas t o co l lect i b i l i t y o n l y i f t h e OIC refl ect s the t ax p ay er's
reas on ab l e co l lect i o n p o t en t i al (RCP)--t h ati s , th e am o u n tth e Co m m i s s i o n er co ul d
reas on ab l y

co l l ectth ro u g h o t h er m ean s , i n cl u di n g ad m i n i s t rat i v e an dju d ici al
co l l ect i o n rem ed i es . See IRM p t . 5 .8 .4 .3 (2 ) (M ay 1 0, 2 0 1 3 ). A t ax pay er's RCP
o rd i n ari ly i n cl ud es , i n ad d i t i o n t o h i s o wnas s et s an dfu tu re i n co m e, an y am o u n t s
co l l ect i b l e fro m t h i rdp art i es , s u ch as t h ro u g h en fo rcem en to f a l i en ag ai ns t

4 Sec. 6 6 7 2(a) i m

p o s es a p en al t y

equ al t o th e am o un to f an y u np ai d em pl o y m en tt ax es wi t hh el db y

a co rp o rat i o n fro m

i t s em p l o y ees ' wag es o n an y p ers o n wh o wi l l fu l l y fai l s t o co l l ect , acco u n tfo r, o r p ay o ver t ho s e t ax es . In g en eral , an y

p ers o n wi t h the dut y

an dau t h o ri t y

t o cau se t he co rp o rat i o n t o wi th h o l dan d p ay

o ver t h e t ax es i n qu es ti o n can b e s ub jectt o l i ab i l i t y

u n der s ec. 6 6 7 2 (a). See s ec. 6 6 7 1 (b ).-1 3
-

[* 1 3 ] p ro p ert y

h el db y a n o m i n ee o f t h e t ax p ay er. IRM p t . 5 .8 .4 .3 .1 (1 ) (Ap r. 3 0 , 2 0 1 5 ). 5 W e g en eral l y

fi n dn o ab u s e o f d i s cret i o n wh en an Ap p eal s o ffi cer reject s a t ax p ay er's OIC b ecau s e i td oes n o trefl ect t h e t ax p ay er's RCP, d et erm i n edi n
acco rd an ce wi t h the Co m m is s i o n er's ad m i ni s t rat i v e g u i d an ce. E.g
. , Can ey v . Co m m i s s i o n er, T.C. M em o . 2 0 1 0 -9 0 , 2 0 1 0 W L 1 6 8 7 6 7 9, at* 2
. II. St an dardan dSco p e o f Rev i ew A. St an dardo f Rev i ew: Dal t o n Th e p art i es d ev o t e co n s i d erab l e p ort i o n s o f t h ei r b ri efs t o th e qu es t i o n s o f th e s t an d ardan ds co pe o f o ur rev i ew. Wh en a t ax p ay er's u nd erl y i n g l i ab i li t y i s at i s su e i n a CDP cas e, we rev i ew Ap p eal s ' d et erm in at i o n d e n o v o ; o t herwi s e, we
rev i ew t h atd et erm i n at i o n fo r ab u s e o f d i s cret io n . E.g ., Go za v . Co m m i s s io n er, 1 1 4 T.C. 1 7 6 , 1 8 1 -1 82 (2 0 0 0). Th e p art i es ag ree t h at , b ecau s e p et i t i o n er d o es n o t ch al l en g e h i s u n derl y i n g l i ab i l it i es , o ur rev i ew i s g en eral l y fo r ab us e o f d i s cret i o n . Cf. 5 U.S.C. s ec. 7 0 6 (2 )(A) (2 0 1 8 ) (req u i ri n g a rev i ewi n g co u rts ubjectt o th e ju d i ci al rev i ew p ro v i s i on s o f t h e Ad m i ni s t rat i v e Pro cedu re Act(APA) t o " h o l d
u n l awfu l an ds etas i d e ag en cy act i o n , fi n di n g s , an dco ncl u s i o ns fo u n d t o b e * * *

5 Th e v al ue o f p ro pert y

h el do n b eh al f o f a t ax p ay er b y a n o m i n ee can b e i n cl u d edi n th e t ax p ay er's RCP reg ard l es s o f wh et h er t h e Co m m is s i o n er p ro ceed s ag ai n s tth e p ro p ert y . See IRM p t . 5 .8 .5
. 6 (7 ) (Sep t . 3 0 , 2 0 1 3 ) (" Iti s n o tn eces s ary t o actu al l y

s eeko r o b t ai n an y

s p eci fi c l eg al rem ed y

i n o rd er t o ad dres s * * * [t ran sferee/ n o m i n ee/ al t er eg o ] i s s u es i n an o ffer." ).-1 4
-

[* 1 4 ] arb i t rary , cap ri ci ou s , an ab u s e o f d i s cret i o n , o r o t herwi s e n o t i n acco rd an ce wi th l aw" ). In Ken dri ck s v . Co m m i s s i o n er, 1 2 4 T.C. 6 9 , 7 5 (2 0 0 5 ), h o wev er, we
wro te: " Wh en faced wi th qu es t i o n s o f l aw * * * th e s tan d ardo f rev i ew m ak es n o d i fferen ce. Wh et h er ch aract eri zedas a rev i ew fo r ab u se o f d is cret i o n o r as a
co n si d erat io n 'd e n ov o ' (o f a qu es t i o n o f l aw), we m u s trejecterro n eo u s v iews o f th e l aw." Bu tKen dri ck s l efto pen th e qu es t io n o f th e s tan d ardwe ap p l y i n i d en t i fy i n g erro r i n a l eg al co n cl u s i on o n wh ich a d et erm i n at i on b y Ap p eal s res t s . Do we accep tan y

l eg al co n cl u s i o n s th atare reas o n ab l e, ev en i f we m i g h treach a d i fferen t co n cl u s i o n ? Or d o we i n s t eadres o l v e u n d erl y i n g l eg al i ss u es b y ap p ly i n g o u r o wn v i ew o f t h e l aw? In Dal t o n v . Co m

m is s i o n er, 6 8 2 F.3 d1 49 , 1 5 6 (1 s tCi r. 2 0 12 ), rev ' g 1 3 5 T.C. 3 9 3 (2 0 1 0 ), an dT.C. M em o . 2 0 1 1 -1 3 6 , th e Co u rto f Ap p eal s fo r th e Fi rs t Ci rcu i td es cri b ed a co u rt 's ro le i n CDP cas es as " co n s i d er[i ng ] wh et her t h e fact u al
an d l eg al co n cl u s i o n s reach edata CDP h eari n g are reas on ab l e, n o twh et h er t h ey
are co rrect ." Res po n d en t u rg es u s t o " fo l l o w th e reas o n ab l en es s s t an d ards etfo rt h b y th e Fi rs tCi rcu i ti n Dal t o n ." Pet i t i o n er o bs erv es th at , b ecau s e h e d o es n o t
res i de i n th e Fi rs tCi rcu i t , we n eedn o t fo ll o w th e d o ct ri n e o f Go l s en v . Co m m i s s i o n er, 5 4 T.C. 7 42 , 7 5 7 (1 9 7 0 ), aff'd , 4 4 5 F.2 d9 8 5 (1 0t h Ci r. 1 9 7 1 ), an d-1 5
-

[* 1 5 ] ap pl y

Dal t o n 's reas o n ab len es s s t an dard . Pet i t i o ner t hu s u rg es u s i n s teadt o
rev i ew SO M at th ews ' l eg al co n cl u s i o n d e n o v o . Th i s Co u rth as n o ty etex p res sl y ad op t edthe reas o n ab l en es s t es tart i cu l at ed b y th e Co u rto f Ap p eal s i n Dal t o n , 6 an dth e p res en t cas e d o es n o tg i ve u s o ccas i o n t o d o s o . Fo r th e reas o n s d es cri b edb el o w, we co n cl u d e t h at SO M at t h ews ' d et erm i n at i o n t h atM rs . Hi n erfel dh el d t i t l e t o th e Larch m o n tres i d en ce as p et i t i o n er's n o m i n ee was n o to n l y reas o n ab l e b u tco rrect . 7

6 Ci t i n g o u r o p i n i o n s i n Po rro v . Co m m i s s i o ner, T.C. M em o. 2 0 1 4 -8 1 , aff'd , 5 8 9 F. Ap p 'x 5 0 2 (1 1 t h Ci r. 2 0 1 5 ), an dJ ewel l v . Co m m i s s i o ner, T.C. M em o . 2 0 1 6 -2 3 9 , res p o nd en t cl ai m s t h atwe h av e " ap p l i edth e Dal t o n p ri n ci p les i n cas es o u t s i d e o f t h e Fi rs tCi rcu i t ." InPo rro , we d i d up h o l das reas o n ab l e an SO's d et erm i n at i o n reg ard i n g the o wn ers h i p o f p ro p ert y , b u tth ati s s u e p ro v edt o b e i rrel ev an tt o o u r d i s p o s i t i o n o f t h e cas e. Th e t ax pay ers ' RCP wo u l dh av e b een m o re th an twi ce t h e am o u nto f t h ei r o ffer wi t h o u treg ard t o t h e p ro p erty i n i s s u e. Th u s, we n o t edth at , " ev en i f we ag reedwi t h * * * [t h e t ax p ay ers ] an dd i s reg ard ed th e v al u e o f t h e * * * [p ro p erty ] , i two u l d n otaffect the o u t co m e o f t h i s cas e." Po rro v . Co m

m i s s i o n er, at* 1 7 . InJ ewel l v . Co m m i s s io ner, at * 1 9 , we ci t ed Dal t o n v . Co m

m i ss i o n er, 6 8 2 F.3 d1 4 9 (1 s t Ci r. 2 0 1 2 ), rev 'g 1 3 5 T.C. 3 9 3 (2 0 1 0 ), an d T.C. M em o . 2 0 11 -1 5 6 , p ri n ci p al l y fo r t h e p ro po s it i o n th at , s h ou l dthe Co m m i s s i o n er en fo rce a l i en ag ai n s tp ro p ert y h el db y a co rp o rat i o n thath e cl ai m edt o b e t h e t ax p ay er's n o m i n ee, t h e co rp o rat i o n " m ay h av e an o p p ortu n i t y

t o as s erti t s o wn ers h i p an dt o l i t i gat e t hatqu es t i o n i n an ap pro p ri at e fo ru m . "

7 Becau s e SO M at t h ews d i dn o t ex p lai n h er rat i o nal e i n an y d et ai l , we can n o t b e s u re th ato u r co n cl u s i o n res t s o n th e an al y s i s s h e ap pl i ed . Bu tth e p ro sp ectth at we m i g h tb e rel y i ng o n an an al y s i s th at d i ffers fro m h ers d oes n ot p rev en tu s fro m up h o l d i n g h er d et erm i nat i o n . See i n fra p artIII.C.-1 6
-

[* 1 6 ] B. Sco p e o f Rev i ew: Th e Reco rdRu l e Reg ard i n g th e s co p e o f o u r rev i ew, res po n den t arg u es th at , b ecau s e p et i t i o n er's u n d erl y i n g l iab i l i t i es are n o tati ss u e, rev i ew " s h o u l db e l i m i t edt o th e ad m i n is trat i v e reco rd ." InCam p v . Pi t t s , 4 1 1 U.S. 1 3 8 , 1 4 2 (1 9 7 3 ), th e Sup rem e Co u rto p i n ed : " In ap p l y i ng * * * [t h e] s t an d ard[p ro v i d edi n 5 U.S.C. s ec. 7 0 6 (2 )(A)] , th e fo cal p o i n t fo r ju d i ci al rev iew s h o ul db e th e ad m i ni s t rat i v e reco rd al read y i n ex i s t en ce, n o ts o m e n ew reco rdm ad e i n i t i al ly i n the rev iewi n g co u rt . " In Ro bi n et t e v . Co m

m is s i o n er, 1 2 3 T.C. 8 5 , 9 5 (2 0 0 4 ), rev 'd , 4 39 F.3 d 4 5 5 (8 th Ci r. 2 0 06 ), h o w ev er, we h el dthat , " wh en rev iewi n g fo r ab u s e o f d is cret i o n u n d er
s ect i on 6 3 3 0 (d ), we are n o tl im i t ed b y th e Ad m i ni s t rat i v e Pro cedu re Act* * * an d
o u r rev i ew i s n o tl i m i t edt o th e ad m i n i st rat i v e reco rd ." W e n o t edth atth e s t atu t o ry p ro v is i o n s g o v ern i n g o u r t rad i t i o n al d efi ci en cy juri s d i ct io n p red at edthe APA an d th at , acco rd i n gl y , th e APA's ju di ci al rev iew p ro v i s i o n s d i d n o t ap p l y t o d efi ci en cy
cas es . An dth e ju ri s d i ct i o n g ran t edu s b y s ect i o n 6 33 0 (d ) t o co n s i d er ap peal s i n CDP cas es , we reas o n ed , i s " p artan dp arcel " o f t h e s tatu t o ry fram ewo rk

g ran t i n g
u s juri sd i ct i o n t o red et erm i ne d efi ci en ci es . Id . at9 7 -9 8
. Th e Co u rto f Ap p eal s fo r t h e Ei g h t h Ci rcu i trev ers edo u r Op i n i on i n Ro b i net te an d h el d t h atth e reco rdru l e ap p l ies i n CDP cas es b efo re t hi s Co u rt . Th e co u rtd ecl in edt o v iew CDP cas es as p artan d p arcel o f o u r t rad i t i o nal , p re--1 7
-

[* 1 7 ] APA d efi ci en cy juri s d i ct i o n . " Co l lect i o n du e p ro ces s h eari n g s u n d er § 6 33 0 " , th e co u rto b s erv ed , " were n ewl y -creat edad m i n i st rat i v e p ro ceed i n g s i n 1 9 9 8 , an dth e s t atu te p ro v i dedfo r a co rres p o n d i n g n ew fo rm o f l i m i t ed ju d i ci al
rev i ew." Ro b i net t e v . Co m m i s s i o n er, 4 3 9 F.3 dat 4 6 1. Two o t h er Co u rt s o f Ap p eal s h av e co n cl u d edth atth e reco rdru l e ap p l i es t o CDP cas es b efo re t h i s Co u rt . See Kel l er v . Co m m i s s i o n er, 5 6 8 F.3 d7 10 , 7 1 8 (9 t h Ci r. 2 0 0 9 ), aff'g i n p artT.C. M em o . 2 0 0 6 -1 6 6, an daff'g i n p art , rev 'g i n p artd eci s io n s i n rel at ed
cas es ; M urp hy

v . Co m m i s s i o ner, 4 6 9 F.3 d2 7 , 3 1 (1 s tCi r. 2 0 0 6 ), aff'g 1 2 5 T.C. 3 0 1 (2 00 5 ). Al th ou g h al l th ree Co u rt s o f Ap p eal s thath av e co n s i d eredth e i s s ue h av e reject edo u r p o s i t i o n t h atth e reco rdru le i s i n ap p l i cab l e t o CDP cas es , we h av e n o t
ex p res s l y o v erru l edo u r Op i n i o n i n Ro b i n et t e. No n et h el es s , atl eas ttwo o f o u r
m o re recen tOp in io n s cal l i n t o qu es t i o n o u r rat i o n al e i n th atcas e. In Po rt er v . Co m

m i ss i o n er, 1 3 0 T.C. 1 1 5 , 1 2 0 (2 0 0 8 ), th e Co m m is s i o n er arg u ed th atth e Co urto f Ap p eal s ' rev ers al o f o u r Op i ni o n i n Ro b i n et t e req u i redu s t o accep tth e reco rdru l e wh en rev i ewi n g the d en ial o f i n no cen ts p o u s e rel i ef. W e h ad i n it i al l y ad o p t edo u r p o s it i o n reg ard i n g the i n ap p l i cab i l i t y o f t he reco rdru l e i n i n n o cen t s p o u s e cas es i n Ewi n g v . Co m m i s s i o ner, 1 2 2 T.C. 3 2 (2 0 0 4), v acat ed , 4 3 9 F.3 d1 0 09 (9 t h Ci r. 2 0 06 ). In Ewi ng , we n o t edthe s i m i l ari t y i n th e s tatu t o ry-1 8
-

[* 1 8 ] t ex tg ran t in g u s ju ri s d i ct i o n i n d efi ci en cy an di n n o cen t s po u s e cas es . Sect i o n 6 2 1 3(a) g i v es u s ju ri s d i ct i o n t o " red et erm i n [e] " d efi ci en ci es . An ds ect i on 6 0 1 5 (e)(1 )(A) g iv es u s juri sd i ct i o n t o " d et erm i n e" ap p ro pri at e i n no cen ts p o u s e rel i ef. In Po rt er v . Co m

m i s s i o n er, 1 3 0 T.C. at1 1 8 , we rel i edo n t h ats am e
s i m i l ari ty i n s t atu to ry

t ex t t o co n cl u de t h at" [s ] ect i o n 6 0 15 i s p artan d p arcel o f t h e
* * * s t atu t o ry

fram ewo rk " g o v ern i n g o u r d efi ci en cy juri s d i ct io n . W e d i s t i n gu i sh edRo b i n et te o n t h e g ro u n dth at" Co n gres s ch o s e n o tt o u s e t he wo rd 'd et erm in e' o r s o m e d eri v at i o n t h ereo f i n s ect i o n 6 3 3 0 (d )" . Id . at 1 2 0 . Ind o i n g s o , we i m p l ici t l y ackn o wl ed g edthat , g i v en th e d i fferen ce i n s t atu t o ry t erm s , s ect i o n 6 0 1 5 can m o re read i l y

th an s ect i o n 6 3 3 0 (d ) b e v i ewed as p artan dp arcel o f t h e
s t atu to ry fram ewo rk g o v ern i n g o u r trad i t i on al , p re-APA d efi ci en cy juri s d i ct i o n . M o re recen t l y , i n Kas p er v . Co m m i s s i o n er, 1 50 T.C. 8 (2 0 1 8 ), we accep t ed th e ap p l i cab i l i ty

o f t h e reco rd ru l e i n cas es i n v ol v in g th e Co m m i s s i o n er's d en i al o f wh i st l eb l o wer award s . Am o ng o t h er t h i n g s , we n o t ed t h atth e ju ri s di ct i o n al
s t atu te, s ect i o n 7 6 2 3 (b )(4 ), d o es n o t al l o w u s t o d et erm i n e (o r red et erm i n e) t h e ap p ro p ri at e wh i s t l eb lo wer award . Its i m p l y al l o ws th e Co m

m i s s io n er's d et erm i n at i o n reg ard i n g a wh i s t l eb l o wer award t o b e " ap p eal ed " t o th i s Co u rt . " If Co n g res s 's u s e o f 'd et erm i n e' was as i m p ort an t as o u r cas el aw t el l s u s i twas ," we
reas on ed , " t h en t h e u s e o f 'ap p eal ' i n a ju ri s di ct i o n al g ran ti s t el l i n g ." Id . at1 7 . In-1 9
-

[* 1 9 ] th atreg ard , we ack n o wl ed g edthatth e t ex to f s ect i o n 6 33 0 (d )(1 ), b efo re i t s
am en d m en ti n Decem

b er 2 0 1 5 , was " ad m it t ed l y s im i l ar t o t h ati n s ect i on 7 6 2 3 (b )"
. Id . at1 9 . No n et h el es s , we al lo wedth atKas p er v . Co m m i ss i o n er, 1 5 0 T.C. at1 9
n .1 3, was " n o tth e ri g h tcas e t o rev i s i t th e reco rdru l e's ap p l i cat i o n i n CDP cas es ." No r i s the cas e n o w b efo re u s . As wi t h t he i ss u e reg ard i n g t h e s t an d ardo f
o u r rev i ew, we n eedn o tres o l v e t h e qu es t i o n o f t h e s co p e o f o ur rev i ew. Wh et h er
o r n o t we l i m i to u r rev iew t o th e ad m i n i s t rat iv e reco rd , we wo ul dco n cl u d e t h at SO M at th ews co rrect l y

t o o ki n t o acco u n tth e v al ue o f t he Larch m on tres i d en ce i n
ev al u at i ng p et it i o n er's OIC. III. Oth er Prel i m i naryIs s u es A. Im p acto f Hi n erfel dI Befo re ev al u at i n g SO M at t hews ' d et erm i n at i o n reg ard i n g the n o m i n ee i s s u e,
we m u s tad dres s two as p ect s o f Ap p eal s' co n s i d erat i o n o f t he p res en tcas e t h at p et i t i o n er cl ai m s es t ab l is h , b y t h em s el v es , th atreject i o n o f h is OIC was an ab u s e
o f d i s cret i o n . Fi rs t , p et i t i on er al l eg es th at , i n Hi n erfel dI, th e Co m m i s s i o n er accep t edth atth e t ran s fer o f t h e Larch m o ntres i d en ce h ad n otb een frau du l en t . Pet i t io n er cl ai m s t h atAp p eal s ' al l eg ed fai lu re t o " fo l lo w i ts o wnp ri o r co n cl u s i o n s
* * * al o n e i s arb i t raryan dan ab u s e o f d i s cret i o n ." Res po n den tco u n t ers th at" SO M at th ews * * * was u n d er n o o b l i g at i o n t o reach th e s am e co n cl u s i o n as th ato f-2 0
-

[* 2 0 ] * * * [t h e SO i n t h e p ri o r cas e] reg ard i ng th e tran s fer o f t h e Larch m o n t
res i den ce." W e ag ree. If t h i s Co u rth adco n cl u d edi n Hi nerfel dI th atp et i t i o n er ret ai n ed n o i n t eres ti n t h e Larch m o n tres id en ce aft er h i s tran s fer o f l eg al t i t l e t o h i s wi fe, p et i t i on er m i g h tb e ab l e t o arg u e t h atthatco n cl u s i on was b i nd i ng fo r p u rp os es o f t he p res en tcas e u nd er co ll at eral es t o p p el
. Bu t p et i ti o n er's co u n s el , M r. Kes t en b au m , co n ced edat t ri al th atwe d i dn o tad dres s t h ati ss u e i n Hi n erfel dI
an d th atth e d o ct ri n e o f co l lat eral es t op p el i s t h u s i n ap p l i cab l e. 8 B. Fo rm

o f Deed Pet i t i o ner al s o arg u es th ata m is ch aract eri zat i on , i n th e o ri g i n al n o ti ce o f d et erm i n at i o n , o f t h e d eedb y wh i ch p et i t i o n er t ran s ferred t i t l e t o th e Larch m o n t
res i den ce t o h i s wi fe, ev i d en ceda " m i s tak e o f l aw" th at" s t an d in g al o ne, s h o u l d
co n st i tu t e anab us e o f d i s cret i o n ." Res p o n d en taccep ts th atSO M at t h ews ' d es cri p t io n o f p et i t i o n er as h av i n g " qu i t cl ai m ed " th e Larch m on tres i d en ce was i n

8 Th e SO h an dl i n g th e CDP h eari ng co ncern i n g th e l ev y n o t i ce ad dres s edi n Hi n erfel dI, 1 3 9 T.C. 2 7 7 , co n cl u d edth ataccep t an ce o f M r. Hi n erfel d 's o ffer wo u l db e p rem atu re b ecau se t h en -p en d i n g l i t i g at i on m i g hth av e d i s cl o s ed t h e av ai l ab i li t y

o f an ad d i t i o n al s o u rce o f co l l ect i o n . W e co n cl u d edthat , u n d er th o s e ci rcu m s t an ces , Ap peal s h adn o tab u s edi ts d i s cret i o n i n reject i n g M r. Hi n erfel d 's OIC. In ev al u at i n g M r. Hi n erfel d 's o ffer, Ap p eal s d et erm in edth ath is tran s fer o f th e Larch m o n tres i d en ce t o h i s wi fe h adn o t b een frau du l en t . Wh en t he Co m m i s s i o n er s o u g h tat t ri al an do n b ri ef t o rai s e t h e frau du l en ttran s fer i s s u e, we d ecl i nedt o co n s id er i tb ecau se " [t ] h e t ran s fer o f th e res i d en ce * * * p lay edn o ro l e i n the d et erm i n at i on t o reject* * * [M r. Hi n erfel d's ] o ffer-i n -co m p ro m i s e" . Id . at 2 8 0 n .3
.-2 1
-

[* 2 1 ] erro r (n o t wi t h st an d in g the p art i es ' s ti p u l at i o n d es cri b i n g t h e d eedas a qu i t cl ai m d eed ) b utco nt en d s t h ath er erro r was " h arm l es s " b ecau s e i td idn o t affect h er d et erm i n at io n thatM rs . Hi n erfel dh el dth e Larch m on t p ro p ert y as p et i t i o n er's n o m i n ee. Ag ai n , we ag ree wi t h res p o n d en t . As p et i t i o n er ack n owl ed ges , th e d i s t i n ct i on am o n g the v ari o u s ty p es o f d eed s fo r co n v ey i n g p ro p erty u n d er New Yo rkl aw rel at es t o th e " warran ti es o r co v en an ts m ad e b y th e g ran t o r" --a p o i n t th ath as n o o b v i ou s rel ev an ce t o th e fact o rs o n wh i ch SO M at th ews b as edh er co n cl u s i o n . C. Ad equ acy

o f Ex p lan at i on o f Ap p eal s ' Det erm in at i o n : Ch en ery Pet i t i o ner al s o co m

p l ai n s th at , " [a] l t h ou g h SO M at t h ews ci t edt o t h e IRM
an d i t s p ro v i s i o ns res p ect in g n om i n ee t heo ri es o f o wn ers h i p , th e ad m i n i st rat i v e
reco rdd i s cl o s es n o an al y si s o r t h o u g h tfu l co n s i d erat i o n o f an y o f t h e fact o rs an d fai l s t o ap p l y

th em i n a reas o n edway

t o Pet i t i o ner's cas e" . Pet i t i o n er's arg u m en t i m p l i cat es a fu nd am en t al d o ct ri n e o f adm i n is t rat i v e l aw drawn fro m o p in i o n s o f th e Suprem e Co u rti n SEC v . Ch en ery Co rp . (Ch en ery

I), 3 1 8 U.S. 8 0 (1 9 4 3 ), an d SEC v . Ch en ery

Co rp . (Ch en ery

II), 3 3 2 U.S. 1 94 (1 94 7 ). As art i cu lat edb y th e Co u rti n Ch en ery II, 3 3 2 U.S. at1 9 6 , th e b as i c Ch en ery d o ct ri n e p o s i t s t h at" a
rev i ewi n g co u rt , i n d eal i n g wi t h a d et erm i n at io n o r ju dg m en twh i ch an ad m i n is trat i v e ag en cy al o n e i s au t h o ri zedt o m ak e, m u s tju d g e t h e p ro p ri et y

o f-2 2
-

[* 2 2 ] s u ch act i o n s o l el y b y t h e g ro u n d s i n v o kedb y th e ag en cy ." An dthatb as i c d o ct ri n e h as " an i m

p o rt an tco ro l l ary " : " If t h e ad m in i s t rat iv e act io n i s t o b e t es t ed b y th e b as i s up o n wh i ch i tp u rp o rt s t o res t , th atb as i s m u s tb e s etfo rth wi t h s u ch cl ari ty as t o b e u n d ers t an d ab le." Id
. 9 Th e Ch en ery

d o ct ri n e res t s o n a p ro p er res p ectfo r t h e s ep arat e ro l es o f ad m i n is trat i v e ag en ci es an dth e co urt s wh o rev iew t h ei r d et erm i nat i o ns . In Ch en ery I, 3 1 8 U.S. at8 8 , th e Co u rto p i n ed : " If an o rd er i s v al i do n l y as a d et erm i n at i o n o f p o l icy

o r ju d gm en twh i ch th e ag en cy al o n e i s au th o ri zed t o m ak e
an d wh i ch i th as n o tm ad e, a ju d i ci al ju d g m en t can n o tb e m ad e t o d o s erv i ce fo r an ad m i n is trat i v e ju d g m en t . * * * [A] n ap p el lat e co u rtcan n o ti n t ru de up o n t h e d o m ai n wh i ch Co ng res s h as ex cl u si v el y en t ru s t edt o an ad m i n is trat i v e ag en cy ." Th e Co u rtth u s drew a cl ear d i s t i n ct i o n b et ween act s o f ad m i ni s t rat i v e d i s cret i o n ,

9 As recen t l y

as 2 0 1 1 , th i s Co u rth adn o td eci d edwh et h er th e Ch en ery d o ct ri n e ap p l i edt o o ur CDP cas es . See Ro s en bl o o m v . Co m m is s i o n er, T.C. M em o. 2 0 1 1 -1 4 0 , 2 0 11 W L 2 4 9 0 6 5 9 , at* 7 n .1 7 (" [W ] e h av en 't y etad dres s edth e ap p li cab i l i t y

o f Ch en ery i n CDP cas es , an dwe are n o tg oi n g t o s t arti n a cas e wh ere n ei t h er p art y

m ad e th e arg u m en t ." ). Si n ce t h en , h o wev er, we h av e rep eat ed l y

accep t edthe d oct ri n e's p o ten t i al ap p l i cat i o n . See An ti o co v . Co m m i s s i o n er, T.C. M em o . 2 0 1 3 -3 5 ; J on es v . Co m m i s s io n er, T.C. M em o . 2 0 1 2
- 2 7 4 , at * 2 2 -* 2 3 (i n v o k i n g Ch en ery t o ju s ti fy refu s al t o co n s i der " p os th o c ex p lan at i o n s " fo r s u s tai n i n g Ap p eal s ' d et erm in at i o n ); Sal ah u dd i n v . Co m m i s s i o n er, T.C. M em o . 2 0 1 2 -1 4 1 , 2 0 12 W L 1 7 5 8 6 28 , at* 7 (" [O] ur ro l e u n d er s ect i o n 6 3 3 0 (d ) i s t o rev i ew act i o n s th atth e IRS t o o k, n o t act i o n s th ati t co u ldh av e t ak en ." ).-2 3
-

[* 2 3 ] i n wh i ch co u rt s s h o u l d b e rel u ct an tt o i n t erfere, an dl eg al d et erm i n at i o n s , wh i ch are m ore s qu arel y

wi t hi n th e co u rt s ' p u rv i ew: If t h e act i o n res ts upo n an ad m i n is trat i v e d et erm i n at i o n --an ex erci se o f ju d gm en ti n an area wh i ch Co n g res s h as en tru s t edt o th e ag en cy -- o f co u rs e i tm

u s tn o tb e s etas i d e b ecau se t h e rev iewi ng co u rt m i g h t h av e m ad e a d i fferen td et erm i n at i on were i t em p owered t o d o s o . Bu t i f t h e act i on i s b as edup on a d et erm in at io n o f l aw as t o wh ich th e rev i ewi ng au t h o ri ty

o f t h e co u rt s d oes co m e i n t o p l ay , an o rd er m ay n o ts t an di f t h e ag en cy

h as m is co n cei v edth e l aw. Ch en ery I, 3 1 8 U.S. at9 4
. Al th ou g h the s up p l em en t al n o t i ce p ro v i d es o n l y a co n cl us o ry

ex p l an at i o n o f SO M at th ews ' d et erm in at i o n th atM rs . Hi nerfel dh el dth e Larch m o n t p ro p ert y as p et i t i o n er's n o m i n ee, we can n o n eth el es s up h o ldth atd et erm i n at i o n wi th o u t
v i o l at i n g t h e Ch en ery

d o ctri n e o r i t s co ro l l ary ad equ at e ex p l an at i o n req u i rem en t . Th e reas o n , s i m

pl y p u t , i s th atth e t reat m en t o f M rs . Hi nerfel d as h er h u s b an d 's
n o m i n ee i s a l eg al i s s u e t hati s n o tco m m i t tedt o res p o nd en t ' s ad m i n i s t rat iv e d i s cret i o n . SO M at t hews ' fai l u re t o ex p l ai n h er reas o n i n g m ean s th at , ev en i f we were t o reach th e s am e co n cl u s i o n s h e d i d , we co u l d n o tb e co n fi d en tth atwe
wo u l db e rel y i n g o n th e s am e an al y s i s . Bu to u r up h ol d i n g h er d et erm i nat i o n o n g ro u nd s th atm i g h td iffer fro m t h e p reci s e an al y s i s s h e em p l o y edwo u l dn o t
en cro ach up on the Co m

m i s s i o n er's d i s cret i o n .-2 4
-

[* 2 4 ] Th e i s s u e o f t h e ad equ acy o f a t ax p ay er's p ro p o s edOIC i s o b v io u sl y o n e
co m m i t t edt o th e Co m

m i s s i o n er's ad m i n i s t rat i v e d i s cret i o n . Th erefo re, we can n ot
up h o l dth e reject io n o f an OIC o n g ro u nd s o t h er t han th o s e o n wh i ch th e ag en cy rel i ed . Iti s n o t fo r u s t o s ay wh i ch p ro p os al s are accep t ab le an d wh i ch are n o t . Bu t th e ag en cy

h as al read y

t o l du s th at , i n the ex erci s e o f i t s d i scret i o n, i t wo u l d
n o taccep tp et i t i o n er's OIC i f h e can b e t reat ed as o wn in g t h e Larch m o n t
res i den ce. An dth e qu es t io n o f p et i t i o ner's ri g h t s i n t hatp ro p erty i s a l eg al o n e. Th e ad equ acy

o f an o ffer o f $ x i n s et t l em en to f a l i ab i l i t y o f $ y m ad e b y a t ax p ay er wi th as s et s o f $ z i s a qu es t i o n fo r t h e ag en cy t o d et erm i n e. Bu twh et h er th e as s et s
av ai l ab l e t o s at i sfy

th e t ax p ay er's l i ab i l i t y

are $ z o r s o m e l es s er am o u n t m ay tu rn
o n " det erm i n at i o n [s ] o f l aw as t o wh i ch * * * [o u r] rev i ewi ng au t h o ri t y * * *
co m e[s ] i n to p lay " . See Ch en ery I, 3 1 8 U.S. at9 4
. 1 0

1 0 If t h e reas o n ab l en es s t es to f Dal t o n v . Co m m i s s i o n er, 6 8 2 F.3 d at1 5 6 , d efi n edth e s tan d ardo f o u r rev i ew, th e ques t i o n o f M rs . Hi n erfel d 's s tatu s as p et i t i o n er's n o m i n ee m i gh tn o t b e a l eg al qu es t i o n . As th e Co u rto f Ap p eal s fo r th e Fi rs tCi rcu i treco gn i zed i n Dal t o n , Ap p eal s ' reject i o n o f a t ax p ay er's OIC b ecau s e i td o es n o tt ak e i n t o acco u n tp ro p ert y h el db y a t h irdp art y

wh o m ay b e th e t ax p ay er's n o m i n ee d o es n o td efi n i t i v el y res o l v e th e l eg al i s s u e o f t h e p ro p erty 's o wn ers h i p . Th atqu es t i o n wo u l db e res o lv edo n l y i f an d wh en th e Co m m i s s i o n er p ro ceed s ag ai n s tth e p ro p ert y , atwh ich t i m e t h e al l eg edn o m i n ee wo u l dh av e t h e o p po rtu ni t y t o co n t es tth e Co m

m i ss i o ner's cl ai m . Wh en Ap p eal s reject s a t ax p ay er's OIC b ecau se i tfai l s t o t ak e i nt o acco u ntp ro p erty h el d b y an al l eg edn o m i n ee, i t m erel y co n cl u d es th atth e t ax p ay er i s s u ffi ci en t l y l ik el y t o h av e an i n t eres ti n t h e p ro p ert y t o warran ti t s i ncl u s io n i n t h e t ax p ay er's RCP. An dth at (co n ti n u ed ...)-2 5
-

[* 2 5 ] Al th ou g h SO M at t h ews ' fai l u re t o art i cu l at e h er reas o n i n g d oes n o t ri s ko u r
en cro ach i n g o n th e Co m

m i s s i o n er's d i s cret i o n i n v i o l at i o n o f t h e Ch en ery d o ct ri n e, t h atfai l ure co u l d s t i l l b e g ro u n d s fo r rem an di f i tp rev en t edeffect i v e ju d i ci al rev i ew. Th e req u irem en to f cl ear ex p l an at i o n s o f ag en cy act io n s i s , at l eas t to s o m e ex t en t, i n d ep en d en to f Ch en ery . Ju d g e Fri en d l y arg u edth ati two u ld

" m i sco n s tru e[] " the ad equ at e ex p l an at i o n req u irem en tt o t reat i t as " i n cl u ded wi th i n th e 'Ch en ery

d o ct ri n e'" . Hen ry

J . Fri en dl y , " Ch en ery Rev i s i t ed : Refl ect io n s o n Rev ers al an dRem an d o f Ad m i n i s t rat i v e Ord ers ," 1 9 6 9 Du k e L.J
. 1 9 9 , 2 0 6 . To s at i s fy t h atp arto f t h e ad equ at e ex p l an at i o n req u i rem en tth ati s i n d ep en den to f Ch en ery , h o wev er, an ex p l an at i o n n eed n o tb e " a p arag o n o f cl ari ty " . See Bo wm an Tran s p . In c. v . Ark .-Bes tFrei g h tSy s ., In c., 4 1 9 U.S. 2 8 1 , 2 9 0 (1 97 4 ). Itn eedo n l y

b e s u ffi ci en tt o al l o w fo r " effect iv e ju d i ci al rev i ew"
. Cam p , 4 11 U.S. at1 4 2 -1 4 3
.

1 0 (...co n t i nu ed ) qu es ti o n --h o w l i k el y a t ax p ay er's p o t en t ial i n t eres t i n p ro p ert y m us tb e fo r i tt o b e i n cl u d edi n th e t ax p ay er's RCP--m ay wel l b e o n e co m

m it t edt o the Co m

m i s s i o n er's d i s cret i o n . Ev en s o , we n eedn o td et erm in e t h e ap p l i cab i l it y o f Dal t o n 's reas on ab l en es s t es ti n d eci d i n g wh et h er t o up ho l dAp p eal s ' d et erm in at io n i n th e p res en tcas e o r i n st eadrem an d t h e cas e fo r fu rt h er p ro ceed i n gs . Becau s e we wo u l dco n cl ud e o n the reco rdb efo re u s (wh et h er o r n o t l i m i t edt o th e ad m i n is trat i v e reco rd ) t hat , as a m at t er o f l aw, M rs . Hi n erfel dh el d t h e Larch m on t res i den ce as p et it i o n er's n o m i n ee, p et i t i o n er's i n t eres t i n t h atp ro p ert y wo u l d ap p ro p ri at el y

b e t ak en i n t o acco u n ti n d et erm i n i n g h is RCP u nd er an y s t an d ardo f as s es s i n g p o t en t i al o wners h i p .-2 6
-

[* 2 6 ] SO M at t h ews ' ex pl an at io n o f h er reject i o n o f p et i t i o n er's OIC, t h o u g h
co n cl u s o ry , i s n o n et h el es s ad equ at e fo r u s t o co n du ctju d i ci al rev i ew. W e can
as s es s h er co n cl us i on th atM rs . Hi nerfel d h ol d s th e Larch m o n tres id en ce as p et i t i o n er's n o m i n ee wi t h ou tkno wi n g the p reci se an al y s i s th atl edh er t o t h at
co n cl u s i o n . Al th ou g h the APA req u i res an ag en cy t h atd en i es th e req u es t o f an i n t eres t edp ers on m ad e i n co n nect i o n wi t h an ag en cy p ro ceed i n g t o p ro v id e

" [p ] ro m p tn o t i ce" o f t h atd en i al th ati n cl u d es " a b ri ef s t at em en t o f t h e g ro u n d s fo r d en ial " , 5 U.S.C. s ec. 5 5 5 (e) (2 0 1 8 ), th at req u i rem en t h as b een co n s t ru edas
s i m p l y a co d i fi cat i o n o f t h e m o re g en eral req u i rem en t o f ad equ at e ex p l an at i o n fo r ag en cy act i o n s o ri g i n at in g i n cas el aw, s ee To uru s Reco rd s , In c. v . DEA, 2 5 9 F.3 d 7 3 1 , 7 3 7 (D.C. Ci r. 2 0 0 1) (d es cri b i n g 5 U.S.C. s ec. 5 5 5 (e) as a co d i fi cat i on o f t h e

" 'fu n d am en t al ' req u i rem en t o f ad m i n i s t rat iv e l aw" th at" an ag en cy 's etfo rt h i t s
reas on s ' fo r d eci si o n" ). Th u s , th e 5 U.S.C. s ec. 5 5 5 (e) req u i rem en to f a b ri ef
ex p lan at o ry

s t at em en t i s n o m o re s t ri n g en tth an th e g en eral ad equ at e ex p l an at i on req u i rem en t . A s t at em en t co m p l i es wi t h 5 U.S.C. s ec. 5 5 5 (e) i f i t i s " s u ffi ci en t l y d et ai led * * * [t o al l o w a] rev i ewi n g tri bu n al * * * [t o ] ap p rai s e t h e ag en cy 's d et erm i n at i o n u n d er t h e ap p ro pri at e s t an d ard s o f rev iew." Ci t y o f Gi l let t e, Wy o . v . FERC, 7 3 7 F.2 d 8 8 3, 8 86 (1 0 t h Ci r. 1 9 8 4 ). Becau s e SO M at t h ews ' ex p l an at i o n-2 7
-

[* 2 7 ] o f h er reject i o n o f p et i ti o n er's p ro p o sedOIC wo u l d co m p ly wi t h 5 U.S.C.
s ec. 5 5 5(e) as wel l as th e m o re g en eral ju d i ci al l y creat edad m i n i s t rat iv e l aw req u i rem en t , the ad equ acy o f h er ex p l an at i o n d o es n o tg i v e u s an y m ore reas o n th an th e qu es t i o n o f t h e s co p e o f o u r rev i ew t o reco n s i d er t h e APA's ap p li cab i l i t y t o o u r CDP cas es . IV. M rs . Hi nerfel das Pet i t i on er's No m i n ee Hav i n g d is p o s edo f p et i ti o n er's th res h o ldarg u m en t s an dco n s i d eredth e
s t an d ardan ds co p e o f o u r rev i ew, we n o w tu rnt o th e u l t i m at e i s s u e t h e cas e p res en t s : wh et h er SO M at t h ews was co rrect i n t reat i n g M rs . Hi n erfel d as h o l d i n g t i tl e t o the Larch m o n tres i d en ce as p et it i o n er's n om i n ee. A. Rel ev an tFact o rs Un d er New Yo rkLaw W e b eg i n b y

as k i n g wh et h er New Yo rkco u rt s wo u l dreco g n i ze t h e n o m i n ee th eo ry o n wh i ch SO M at t h ews rel i ed . Al t ho u gh Fed eral l aw p ro v i des m ean s b y wh i ch th e Co m

m i s s i o n er can p ro ceed ag ai ns tp ro pert y o wn edb y

a d el i n qu en t t ax p ay er, t h e qu es t i o n o f wh et h er a t ax p ay er h as an i n teres ti n p art i cu l ar p ro p ert y
m u stb e an s weredb y

St at e l aw. See, e.g ., Un it edSt at es v . Nat 'l Ban ko f Co m m erce, 4 7 2 U.S. 7 1 3, 7 2 2 (1 9 8 5). An d i t i s a " u n i vers al " co n fl ict s o f l aws p ri n ci p l e th at" t h e l aw o f t h e p l ace wh ere i t i s s ituat ed* * * g o v ern s al l m at t ers-2 8
-

[* 2 8 ] co ncern i n g t h e t i t l e an dd i s p os i ti o n o f real p ro p ert y " . 1 6 Am . J u r. 2 d , Co n fl i cto f Laws , s ec. 2 2 (2 0 09 ). Th e Di s t ri ctCo u rtfo r t h e So u t h ern Di s t ri cto f New Yo rkackn o w l ed g edi n Nas sar Fam i l y

Irrev o cab l e Tr. v . Un i t edSt at es , No . 1 3 Ci v. 5 6 8 0 (ER), 2 01 6 W L 5 7 9 3 7 3 7 , at* 8 (S.D.N.Y. Sep t. 3 0 , 2 0 1 6), aff'd s ub n o m . Un i t edSt at es v . Nas s ar, 6 9 9 F. Ap p 'x 4 6 (2 dCi r. 2 01 7), t h at" N ew Yo rks t at e co u rt s h av e n o tex pl i ci t l y ap p li edth e n om i n ee t h eo ry o f o wn ers h i p i n t ax cas es ." As th at co u rtwen to n t o
n o t e, h owev er, i tan do t her Di s t ri ctCo u rt s i n t he Seco n dCi rcu i t" h av e ap p l i edth e
n o m i n ee t h eo ry

i n t ax cas es wh ere t he p ro p ert y i n t eres twas g o v ern edb y New Yo rkl aw." Id .; s ee al so Un i t edSt at es v . Ev s ero ff, No
. 0 0 -cv -0 6 0 2 9 (KAM ), 2 0 1 2 W L 1 5 1 4 8 6 0 , at * 9 -* 1 3 (E.D.N.Y. Ap r. 3 0 , 2 01 2 ), aff'd , 5 2 8 F. Ap p 'x 7 5 (2 dCi r. 2 0 1 3 ); Gi ard i n o v . Un it edSt at es , No . 9 6 -cv -6 3 4 8 T, 1 9 97 W L 1 0 3 8 1 97 , at* 2 -* 5 (W
. D.N.Y. Oct . 2 9 , 1 9 9 7 ); Bl u e Lo tu s Ho l d in g s Lt d ., In c. v . Un i t ed St at es , No . 9 6 -cv -2 3 3 , 1 99 6 W L 6 79 7 5 8 , at* 3-* 4 (N.D.N.Y. Oct . 2 2 , 1 99 6 ); Fi rs tCo rp . Sed an s , In c. v . Un i t edSt at es , No . 9 4 Ci v. 7 6 4 2 (DC), 1 9 9 6 W L 1 4 5 9 5 8 , at* 4 (S.D.N.Y. Ap r. 1 , 1 9 96 ). In d et erm i n i n g wh et h er a t i t l eh o l d er i s real l y a n o m i n ee fo r a d el i n qu en tt ax p ay er, t h e co u rti n each ci tedcas e ap p l i ed a s i x -fact or t es t drawn fro m

Li Bu t t i v . Un i t edSt at es , 8 9 4 F. Supp . 5 89 (N.D.N.Y. 1 9 9 5 ), v acat ed
an d rem an ded , 1 0 7 F.3 d1 1 0 (2 dCi r. 1 9 9 7).-2 9
-

[* 2 9 ] Li Bu t t i w as a wro n g fu l l ev y s u itb ro u g h t b y

Ed i th Li Bu tt i t o ch al l en g e t h e Go v ern m en t 's effo rt s t o co l l ectt ax o wedb y h er fat h er, Ro bert , b y

l ev y i n g o n a raceh o rs e, Dev i l Hi s Du e, wh i ch i t cl ai m eds h e h el das h i s n o m i nee. Al t ho u g h Ed i th an d h er fat h er were New J ers ey res id en t s , Ed i t h b ro u g h ts u iti n the Di s t ri ct Co u rtfo r the No rt h ern Di s tri cto f New Yo rk b ecau s e t h e IRS h ads ei zedDev i l Hi s Du e wh enth e h ors e was i n Sarat o g a t o ru n i n th e Wh it n ey Han d i cap . Becau s e t h e
co u rtd et erm i n edth atNew J ers ey h ada s t ro n g er i nt eres ti n the cas e th an d i dNew Yo rk , i t co n cl u d edthatco n fl i cto f l aws p ri n ci p l es req u i redi tt o " ap p l y New J ers ey l aw, wh en p o s s i bl e" . Id . at5 9 7 . Bu tth e co u rt fo u n d" n o rep o rt edcas es ad dres s i n g th e fact ors rel ev an tt o th e n om i n ee t h eo ry fro m New J ers ey " . Id . at 5 9 8 . W it h th e p art i es ' ag reem en t , th e co u rtth erefo re ap pl i eds i x fact o rs drawn fro m cas el aw i n v ari ou s juri sd i ct i o n s b y t he Di s t ri ctCo u rtfo r t h e Di st ri cto f M o n tan a i n To we An t iqu e Fo rdFo u n d . v . IRS, 7 9 1 F. Sup p . 1 4 5 0 , 1 4 5 4 (D. M o n t . 1 9 9 2 ). As l i s t edb y

th e co u rti n Li Bu t t i , th o s e fact ors are: (1 ) wh et h er i n ad equ at e o r n o co n s i d erat i o n was p ai d b y th e n o m i n ee; (2 ) wh et h er th e p ro pert y

was p laced i n th e n o m i n ee's n am e i n an t i ci p at i on o f a l aws u i to r o t h er l i ab i l i t y wh i l e t he t ran s fero r rem ai n s i n co n t ro l o f t h e p ro p ert y ; (3 ) wh et h er t h ere i s a cl os e rel at i o n s h ip b et ween the n om i nee an dtran s fero r; (4 ) wh et h er t h e * * * [p art i es ]-3 0
-

fai l edt o reco rdth e co n vey an ce; (5 ) wh et h er t h e t ran s fero r ret ai n s p o s s es si o n; an d (6 ) wh et h er t h e t ran s fero r co n t i n ues t o en jo y th e b en efi t s o f t h e t ran s ferred p ro p erty . * * * Li Bu t t i , 8 9 4 F. Sup p . at5 9 8. 1 1 B. Ap p li cat i o n o f Fact o rs Fo r t h e reas o n s ex p l ai n edb el o w, co n s i d erat i o n o f t h e s ix Li Bu t t i fact o rs
s up p ort s SO M at t h ews ' co n cl u s i o n thatM rs . Hi n erfel d h o l ds th e Larch m o n t
res i den ce as h er h u s b an d 's n om i n ee. [* 3 0 ]

1 1 Onth e fact s b efo re i t , th e co u rti n Li Bu t t i v . Un it edSt at es , 8 94 F. Sup p . 5 8 9 (N.D.N.Y. 1 9 9 5), v acat edan drem an d ed , 1 0 7 F.3 d1 1 0 (2 dCi r. 1 9 97 ), fo u n d o n l y o n e o f t h e l i st edfact o rs (cl o s e rel at i o n s h i p ) t o b e p res en tan d t h u s co n cl u d ed th atEd i th Li Bu t t i d i dn o th ol dDev i l Hi s Du e as h er fat h er's n o m i nee. Th e co u rt al s o reject edthe Go v ern m en t's arg u m en tth atth e s t ab l e b u s in es s th ato wn edth e h o rs e was an al t er eg o o f M r. Li Bu t t i o n th e g ro u n ds th atth e al t er eg o th eo ry ap p li edo n l y t o p i erce t h e v ei l o f a co rp o rat i o n an dco u l dn o tb e ap p li edt o i m p u t e p ro p erty o f a p ro p ri et o rs h i p t o i t s o wn er. On ap peal , th e Co u rto f Ap p eal s fo r t h e Seco n dCi rcu i t v iewedth e Di s t ri ctCo u rtas h av i n g ev i d en ced" an o v er-ri gi d 'p reo ccup at i o n wi t h qu es t i o n s o f s t ru ctu re'" . Li Bu t t i , 1 0 7 F.3 d at1 1 9 (qu o t i n g Bri d g es to n e/ Fi res t o n e, In c. v . Reco v ery Cred i tServ s ., In c., 9 8 F.3 d1 3, 1 8 (2 dCi r. 1 9 9 6 )). Th e ap p el l at e co urtreas o n edth at" i f Ro b ertd o m i n at edan dco n tro l l ed Li o n Cres t[t h e s t ab l e] h e s h ou l dn o tb e ab l e t o es cap e h i s t ax l i ab il i t i es s i m p l y b ecau s e i twas n o ti n co rp o rat ed , an dh e ch o s e, i ns t ead , t o co n s t i tu t e h i s d au g h t er as h i s u n i n co rp o rat edb u s i n es s' n o m in ee." Id
.-3 1
-

[* 3 1 ] 1
. Ad equ acy o f Co ns i derat i o n Pet i t i o ner h as n otes t ab l is h edth atM rs . Hi n erfel dp ai dan y co n s i derat i o n fo r th e Larch m o n tres i d en ce. 1 2 No n e o f t h e p aym en t s m ad e b y M rs . Hi n erfel dth at p et i t i o n er an dh is at t o rn ey h av e, atv ari o u s t i m es , cl ai m edt o b e t h e co n s i d erat i o n fo r t h attran s fer were m ad e co n t em p o ran eo u s l y

wi t h t h e d eedb y

wh i ch p et i t i o n er tran s ferred t o h i s wi fe t i t l e t o th e Larch m o n tres i d en ce. Th e reco rdi n cl u d es n o wri t ten d o cu m en t at i o n th ats p eci fi cal l y i d en ti fi es th o s e p aym en t s as b arg ai n ed -fo r
co n si d erat io n fo r M rs . Hi nerfel d 's acq u i s i t i o n o f t he res i d en ce. Al th ou g h p et i t i o n er an dh i s at t o rn ey m ad e co n fl i ct i n g cl ai m s ab o u t wh i ch o f M rs . Hi n erfel d 's p aym en t s i n s at i s fact i o n o f p et i t io n er's l iab i l i t i es co n s ti tu t ed
co n si d erat io n fo r p et i t i o n er's tran s fer o f t h e res i d en ce, th ey b o t h en d edup s i n g l i n g
o u tM rs . Hi n erfel d ' s M arch 2 0 02 p aym en to f $ 3 0 0 ,0 0 0 t o Co m m erce Ban kan dh er $ 7 5 0 ,0 0 0 p aym en tt o Fl eet Ban kth e fo l lo wi n g No v em ber. Pet i t i o n er wo u l dth u s h av e u s b el i ev e t h ath e an dh is wi fe en t eredi n t o an ag reem en tn o l at er t h an M arch 2 0 0 2 fo r h er t o acq ui re t h e Larch m o n tres i d en ce an d t h ath i s co n v ey an ce t o h er i n Feb ru ary 2 0 0 3 s at i s fi ed a p reex i s t in g o b l i gat i o n . New Yo rk l aw req u ires co n t ract s fo r t h e s al e o f real es t at e t o b e i n wri ti n g, N.Y. Gen . Ob l i g . Law s ec. 5 -7 0 3 (2 )

1 2 Pet i t i o ner h as th e b u rd en o f p ro v i n g th atSO M at th ews ab u s edh er d i s cret i o n i n reject i ng h is OIC. See Ru l e 1 4 2 (a); Ti t s wo rth v . Co m m i s s i on er, T.C. M em o. 2 0 1 2 -1 2 , 2 0 1 2 W L 8 66 7 0 , at* 6
.-3 2
-

[* 3 2 ] (M cKi n n ey

2 0 1 8 ) (" A co n t ract fo r * * * th e s al e * * * o f an y real p ro p ert y
* * * i s v o idu n l es s th e co n tract o r s o m e n o t e o r m em o ran du m th ereo f, ex p res s i n g th e co n s i d erat io n , i s i n wri t i n g , s ub s cri b edb y the p art y t o b e ch arg ed , o r b y

h i s l awfu l ag en t t h ereu n t o au t h ori zedb y wri ti ng ." ), an dthe reco rdp ro v id es n o
ev i d en ce t h atp et i t i on er an dh i s wi fe co m m i t tedth ei r al l eg edag reem en tt o wri t i n g . If p et it i o n er an d M rs . Hi n erfel dh aden t eredi n t o an o ral ag reem en treq u iri n g h i m t o tran sfer t o h er t i t le t o t h e Larch m o n t res i d en ce i n co n s id erat i o n o f t h e p aym en ts
s h e m ad e i n M arch an d No v em b er 2 0 0 2 , h er p artp erfo rm an ce o f t h atag reem en t
m i g h th av e en ab l edh er t o h av e a co u rtco m p el p et it i on er's t ran sfer o f t i tl e d es p i t e th e ab s en ce o f a wri t ten ag reem en t . See i d ., s ec. 5 -7 0 3 (4 ) (" No t h i n g co n t ai n edi n th i s s ect i o n ab ri dg es th e p o wers o f co u rt s o f eq ui t y t o co m p el th e s peci fi c p erfo rm an ce o f ag reem en ts i n cas es o f p art p erfo rm an ce." ). Bu tth e co n fl i ct i n g cl ai m s m ad e b y

p et i t i o n er, h i s wi fe, an dh i s at t o rn ey reg ard i n g th e p reci s e t erm s o f th e al l eg edag reem en tp ro vi d e g ro un d s fo r s kep ti ci s m ab ou tth e ex is t en ce o f an ag reem en twi t h s u ffi ci en t l y cl ear t erm s t o b e s p eci fi cal l y en fo rced
. In s h o rt , ev en co n s i d eri n g th e ad d i t i on al ev i d en ce p res en t edattri al , 1 3 th e
reco rdd o es n o tes t ab l i s h a cl ear en o u g h n ex u s b et ween p et i t i o n er's tran s fer o f t i t l e

1 3 If we were t o d ecl in e t o co n si d er t h e Hi n erfel d s ' tri al t es ti m o n y , we wo u ld h av e n o ex pl an at i o n atal l o f t h e d i s crep an cy i n t i m i n g b et ween th e t ran s fer o f t i t l e an d th e p aym en t s t h atal l eg ed l y p ro v i d edco n s id erat i o n fo r t h at t ran sfer.-3 3
-

[* 3 3 ] t o th e Larch m on t res id en ce an ds p eci fi c p aym en ts b y M rs . Hi n erfel dfo r u s t o accep tth o se p aym en t s as b arg ai n ed -fo r co n s i d erat i o n .

2
. Tran sfer W i t h Ret ai n edCo n t ro l i n An t i ci p at i o n o f Li ab i l i t y Al th ou g h M rs . Hi n erfel dad m i t t edattri al th ats h e h adacq u i red t it l e t o th e Larch m o n tres i d en ce t o p ro t ecti tfro m p et i t i o n er's cred i t o rs , p et i t i o n er arg u es th at th e s eco n dLi Bu t t i fact o r d o es n o tap p l y i n th e p res en tcas e b ecau s e " [t ] h e Larch m o n tres i d en ce was tran sferred t o Ru t h t h ree y ears p ri o r t o th e as s es s m en to f th e t ax l iab i l i t i es i n i ss u e, an dwi t h o u t an y kn o wl ed g e o f t h e s am e." As art i cu l at ed b y th e co u rti n Li Bu t t i , 8 9 4 F. Sup p . at5 9 8 , h o w ev er, t h e fact o r ap p l ies i f t h e tran s fer was m ad e " i n an t i ci p at i o n o f a l aws u i to r o t h er l i ab i l i t y " . Th e tran s fer
n eed no th av e b een m ad e i n an t i ci p at i o n , o r t o av o idth e co l l ect i o n , o f t h e s p eci fi c l i ab i l i ty th atth e Co m

m i s s i o n er s eek s t o h av e s at i s fi ed
. In th e cas e o f a t ran s fer o f t i t l e t o res i d en ti al p ro p ert y fro m o n e o ccup an tt o
an o th er, i ti s n o t o b v io u s h o wo n e g o es ab o u td et erm i n in g wh et h er t h e t ran s fero r ret ai n ed " co n t ro l " o f t he p ro p ert y aft er t h e t ran s fer. Th e l o cat i o n o f l eg al t i t l e
wo u l db e u n l i k el y

t o h av e a s i gn i fi can tp ract ical i m p acto n the res i den t s ' u s e an d
en jo ym en to f t h e p ro pert y . Perh ap s i n reco g n i t io n o f t h atreal i t y , th e Fed eral Di s t ri ctCo u rt s i n th e Seco n dCi rcu i t, i n ap p ly i n g th e Li Bu t ti fact o rs , h av e t en d edt o equat e p o s ses s i o n-3 4
-

[* 3 4 ] an d co n t ro l . Fo r ex am p le, i n Ev s ero ff, 2 0 1 2 W L 1 5 1 4 8 6 0 , at* 1 1 , th e Di s tri ctCo u rtfo r t h e Eas t ern Di s t ri cto f New Yo rkwro t e: " Ev i d en ce i n t h e reco rd i n d i cat es th atth e s eco n dfact o r i s s at i s fi edi n th at* * * th e p ro p ert y was tran s ferred i n an t i ci p at io n o f Ev s ero ff's l iab i l i t y t o th e IRS an dp os s i b l y h i s
es tran g edwi fe, an dEv s ero ff rem ai nedi n p o s s es s io n an dco n tro l o f th e Do v er St reet Res i d en ce." InNas s ar Fam i l y Irrev o cab le Tr., th e Di st ri ctCo u rtfo r t h e So u thern Di st ri ct o f New Yo rkco n cl u d ed t h ata t ru s tt o wh i ch a t ax p ay er h ad tran s ferred an ap art m en th el dthatp ro p erty as th e t ax p ay er's n o m i n ee. Th e co u rt b eg ani t s an al y s i s b y

s t at i n g i t s fi n d i n g " t h atth e u n d i s p u t edev i d en ce d em on s trat es th at* * * [t h e t ax pay er] h as ex erci s edco m p l et e co n tro l o v er t he Ap art m en tan d h as ret ai ned al l th e b en efi ts o f o wn ers h i p , s u g g es t i ng th at h e, n o tth e Tru s t , i s th e tru e o wn er o f t h e p ro p ert y ." Nas s ar Fam i l y Irrev o cab l e Tr., 2 0 1 6 W L 5 7 9 3 7 3 7 , at* 9 . Bu tat n o p o i n ti n i t s an al y s i s d i dth e co u rtd i fferen ti at e b et ween p o s s es s i o n
an d co n tro l . (In d i s cu s s i n g t h e s eco n dLi Bu t t i fact o r, th e co u rtreferred o n l y t o
ev i d en ce t h atth e t ax p ay er t ran s ferred the ap art m en tt o th e t ru s ti n an ti ci p at i o n o f th e t ax l iab i l i t i es i n i ss u e an do t h er l i ab i li t ies .) W i t h o u t ci t i ng an y

cas el aw o n p o i n t, res p o n d en ts eem s t o fo l l o w th e s am e t ack : es s en t i al l y

equ at i n g p o ss es s i o n an dco n t ro l . Inl i s t i ng th e reas o n s t o b el i ev e th atp et i t i o n er ret ai nedco n t ro l o v er t h e Larch m o n tres i d en ce, res p o n den tn o t es-3 5
-

[* 3 5 ] th atp et i t i o n er an dM rs . Hi n erfel d h av e l iv edth ere s i n ce 1 96 8 an dth at p et i t i o n er co n t i n u edt o p ay atl eas ts o m e o f t h e ex p en s es rel at i n g t o th e p ro p ert y aft er t ran s ferri n g t i t l e t o h is wi fe. Onth e p rem i s e t h atM rs . Hi n erfel dact edat p et i t i o n er's d i rect i o n i n s at i s fy i n g h i s l i ab i li t i es , res po n d en tas k s u s t o i n fer t h at
s h e al s o act edath i s d i rect i on i n p ay i n g h o u s eh ol dex pen s es . Pet i t i on er co u n t ers :

" [T] h e fact th at* * * [h e] m i n im al l y s up p o rt edth e res i d en ce b y p ay i n g i n s i g n i fi can tex p en s es can n o tb e en ou g h t o es t ab l i s h h i s 'co n t ro l o ver t h e p ro p erty '"
. Bu tp et i ti o n er h as fai ledt o i d en t i fy an y res p ecti n wh i ch h i s tran s fer t o h is wi fe o f l eg al t i t l e t o th e Larch m o n tres i d en ce m at eri al l y affect edth ei r u s e o f t h e p ro p erty . As res p o n den targ ues : " Th ere i s n o i n d i cat i o n i n th e reco rdth at t h e 't ran s fer' o f t h e Larch m o n tres id en ce t o M rs . Hi n erfel d affect edPet i t i o n er's u s e o f th e p ro p ert y

i n an y way ." Cert ai n l y , p et i t i o ner rem ai n ed i n p o s s es s i o n o f t h e p ro p erty . To the ex t en tth atp o s s es s io n can b e eq u at edwi t h co n t ro l , h e al so ret ai n ed co n tro l o f t h e p ro p ert y . An d , ag ai n , M rs . Hi n erfel dad m i t t ed t h ats h e acq u iredt i t l e t o t h e p ro p ert y i n an effo rtt o s h i el di t fro m p et i t i o ner's cred i t o rs . 1 4

1 4 Th e ad m i ni s trat iv e reco rdal o n e p ro v i d es s u ffi ci en tev i d en ce t o s up p o rta co n cl u s i o n th atth e Larch m o n tres i d en ce was p laced i n M rs . Hi n erfel d 's n am e i n an t i ci p at i o n o f a l aws u i to r o t h er l i ab i l i t y . SO M at t h ews , o f co u rs e, d idn o th av e M rs . Hi n erfel d 's tri al t es t i m o n y b efo re h er. SO M at t h ews s eem s t o h av e i n ferred (co n ti n u ed ...)-3 6
-

[* 3 6 ] Fo r t ho s e reas o n s , we co n cl u d e t h atth e s eco n dLi Bu t t i fact o r al s o wei g h s i n fav o r o f v i ewi n g M rs . Hi n erfel das h o l di n g the Larch m o n tres i d en ce as p et i t i o n er's
n o m i n ee. 3
. Cl o s e Rel at i o n s h i p Pet i t i o ner ad m i t s t h ath e an dh i s wi fe h av e a " cl os e rel at i o ns h ip " b u t cl ai m s th at , u n d er t he ci rcu m s t an ces , th ei r rel at io n s hi p o ug h tt o b e a " n eu t ral " fact o r. As h e art icu l at es h i s arg u m en t : " Al t h o u g h th ere i s a 'cl o s e rel at i o n s h i p' b et ween th e al l eg edn o m i n ee (Ru t h ) an dPet i t i o n er; an dal t h o u g h Pet i t i o ner res i d es i n th e
res i den ce an d en

jo y s i ts b en efi t s , co n s i d eri n g th e m ari t al rel at i o n s h ip , an dth e fact

1 4 (...co n t i nu ed ) fro m th e fact th atth e t ran s fer o f t i t l e t o th e Larch m o n t res i d en ce o ccu rredwh i l e Th erm aco n 's em

p lo ym en t t ax es were accru i n g th atp et i t i o n er m ad e t h e t ran s fer t o p ro t ectth e res i d en ce fro m h i s p ers o nal l i ab i l i t y fo r t h os e t ax es . Becau s e s h e p u rp ort edt o ap p l y

th e fact o rs li s t edi n IRM p t . 5 .1 7 .2 .5 .7 .2 (3 ), s h e ap p aren t l y fel t s h e h adt o es t ab l i sh th atth e t ran s fer was " fo r t ax av o i d an ce p u rp o s es " . Bu t res p o n d en t d i dn o t as s es s an y o f t he l i ab i l i t i es i n i s s u e u n t i l Feb ru ary 2 7 , 2 0 0 6 , an d th e reco rdp ro v i d es n o ev i d en ce t h atp et i t i o ner was aware o f Th erm aco n 's u np ai dem

p l o ym en tt ax es b efo re t h atd at e. In an y ev en t , u n der t h e Li Bu t t i fact o rs , th e rel ev an tques t i o n i s n ot wh et h er t h e t ran s fer i n i s s u e was m o t i vat edb y a d es i re t o av o idth e p art i cu l ar t ax l iab i l i t i es i n i s s u e b u ts i m p l y wh et h er t h e tran s fer was m ad e t o p ro tectth e p ro p ert y fro m l i ab i l i t i es . An d t h e ad m in i s t rat i ve reco rd p ro v id es p l en t y

o f ev i d en ce t h atp et it i o ner's tran s fer t o h i s wi fe o f t i t l e t o th e Larch m o n tres i d en ce was rel at edt o h i s an dTh erm aco n 's fi n an ci al d i ffi cu l t i es . In d eed , p et i t i o n er i n s i s t edt o SO M at t h ews th ath i s wi fe's p aym en t o f l i ab i l i t i es s erv edas the co n s i d erat i o n fo r t h e t ran s fer.-3 7
-

[* 3 7 ] th atRu t h p ai dfo r al m o s tal l co s t s res p ect i n g th e res i d en ce, i ti s s ub m i t t ed th atth es e are n eu tral fact o rs ." Pet i t i o ner's reas o ni ng s eem s t o b e g ro u n dedo n th e p rem i s e t hat , wh en ev er
o n e s po u s e t ran sfers a jo i n tres i d en ce t o th e o t h er, t h e t ran s fero r's co nt in u edu s e
an d en jo y m en to f t h e res i d en ce i s t o b e ex p ect ed
. Gi v en t hei r rel at i o n sh i p , th e tran s feree i s u nl ik el y

t o s en d t h e t ran s fero r p ack i n g aft er s ecu ri n g t i tl e t o t he
res i den ce. Th e Co u rto f Ap p eal s fo r t h e Seco n dCi rcu itreco gn i zed t h i s real i t y i n a b an krup t cy

cas e wh en i treject edth e cred i t o rs ' arg u m en tthatth e d eb t or's res i d i n g atp ro p ert y

p u rch as edb y

h i s wi fe an dtran s ferred t o a t ru s tev i den ces th atth e d eb to r was th e p ro p ert y 's equ i t ab l e o wn er. Bab i t t v . Veb el i u n as (In re Veb el i u nas ), 3 3 2 F.3 d 8 5 (2 dCi r. 2 0 0 3 ). As t h e co u rto b s erv ed : " [T] h e m ere fact th atth e d eb t o r l i v edatLat t i n g to wnEs t at e, al o ng wi t h h i s wi fe an d fam i l y , wi th o u t p ay i n g ren td o es n o td iv es t* * * [t h e wi fe] o r th e * * * [t ] ru s to f o wn ers h ip o f t he p ro p erty , b ecau s e a h o m eo wn er wo u l db e ex pect edt o al l o w h er s p o u se an d ch i l dren t o l i v e ren t -free i n h er h o m e." Id . at9 2 . An dwe o u rs el v es h av e n o t ed th at" [c] o u rt s * * * m

u s tb e co gn i zan to f l et t i ng a cl o s e rel at io n s h i p t ak e p reced en ce o v er al l o f t he o t her fact o rs " i n d et erm in i ng wh et her a rel at i v e act s as
n o m i n ee fo r a t ran s fero r. Dal t o n v . Co m m i s s io n er, 1 3 5 T.C. at4 1 6
.-3 8
-

[* 3 8 ] Cert ai n l y , " a cl o s e rel at i o n s h i p b etween g ran t o r an d g ran t ee d o es n o t
n eces s ari l y

m ak e t h e g ran t ee t h e g ran t o r's n o m i nee." Id . Bu tren d eri n g t h e cl o s e rel at i o n s h i p fact o r n eu t ral , as p et i t i o n er s ug g es t s , wo u ldg o t o o far i n t h e o t h er d i rect i o n . When o t h er fact o rs wei g h i n fav o r o f t reat i n g o n e rel at edp art y as th e
o th er's n o m i nee, as i n p et i t io n er's cas e, t h e p art i es ' rel at i o n s h i p can an ds h o u l d p ro v id e fu rt her s up p o rtfo r t h attreat m en t .

4
. Reco rd i n g of Co n vey an ce Al th ou g h the co py

o f t h e d eedb y

wh i ch p et i ti o n er t ran sferred t o h is wi fe t i tl e t o the Larch m o n tres i d en ce t h ati s i n cl ud ed i n th e reco rdb ears n o ev i d en ce o f
reco rd i n g , res p o n d en td oes n o tco n t es tp et i t i o n er's cl ai m th at " [t ] he d eed refl ect i n g th e t ran s fer was p ro p erl y reco rd ed ." Onth e b as i s o f res p o n d en t 's co n ces si on , we wi l l treatth e fo u rt h Li Bu t t i fact o r as wei g h i n g ag ai ns tv i ewi n g M rs . Hi n erfel das p et i t i o n er's n o m i n ee i n h o l di ng t i t l e t o th e Larch m o n tres i d en ce.

5
. Ret en t i on o f Po s s es s i o n an dCo n t i n u edEn j o ym en to f t h e Tran sferred Pro p ert y In th e cas e o f p ro p ert y

u s edas a res i d en ce, p o s s es s i o n an d co n t i n ued
en jo ym en tam o u n tt o th e s am e t h i n g . Thu s , i n th e p res en tcas e, t h e fi fth an ds i x t h Li Bu t t i fact o rs co l l ap s e i n t o o n e. An d t ho s e fact o rs b o th wei g h i n fav o r o f treat i n g M rs . Hi nerfel d as p et i ti o n er's n o m i nee i n h ol d i n g t i t l e t o th e p ro p erty . As-3 9
-

[* 3 9 ] n o t edab o v e, t h ere i s n o ev i d en ce i n th e reco rdth atp et i t i o n er's tran s fer t o h i s wi fe o f t i t l e t o th e Larch m o n tres i d en ce s i g ni fi can tl y affect edh i s p o s s es s i o n o r
en jo ym en to f t h e p ro pert y . V. Co n cl u si o n Becau s e al l o f t he Li Bu t t i fact o rs o t h er t h an th e reco rd i n g o f t h e d eedwei gh i n fav o r o f t reat in g M rs . Hi nerfel das p et i t i o n er's n o m i nee i n h ol d i n g t i t l e t o th e Larch m o n tres i d en ce, SO M at t h ews ' d et erm i nat i o n t o th ateffect was n o to nl y
reas on ab l e b u t co rrect . Pet i t i o ner t ran s ferred th e p ro pert y t o a p ers o n --h i s wi fe-- wi th wh o m

h e h ada cl o s e rel at i o n s hi p . He fai l edt o es t ab l i s h t h atM rs . Hi n erfel d p ai dad equ at e co ns i d erat i on fo r t h e p ro pert y . M rs . Hi n erfel d ad m i t t ed attri al th at t i tl e t o the Larch m o n tres i d en ce was p l aced i n h er n am e t o p ro t ectth e p ro p ert y fro m h er h u s b an d 's cred i t o rs (an dth e ad m i n i s t rat iv e reco rdb efo re SO M at t h ews g av e h er g ro u n d s t o i n fer t h att o h av e b een th e cas e). Fi n al l y , p et i t i o n er fai l edt o i d en t i fy an y res p ecti n wh i ch th e t ran s fer o f l eg al t i tl e t o t h e res i d en ce affect edh i s
u s e o r en jo ym en to f t h e p ro p ert y . Becau s e M rs . Hi nerfel dcan ap pro p ri at el y b e-4 0
-

[* 4 0 ] treat edas p et i t i o n er's n o m i n ee i n h o ld i n g t i tl e t o t h e Larch m o ntres i d en ce, SO M at th ews d i d n o tab u s e h er d i s cret i on i n reject i n g an OIC t hatd i d n o trefl ect th e v al u e o f t h atp ro p ert y . Deci s i o n wi ll b e en t eredfo r
res p o nd en t .