Opinion ID: 603772
Heading Depth: 3
Heading Rank: 6

Heading: Transfer of Ownership of Chadwick

Text: 87 Finally, the government contends that the district court should not have excluded roughly $200,000 from the gross income base of the penalties assessed against Belloff and Gold. This was income each purportedly derived from Chadwick during 1984. Belloff and Gold were both one-third shareholders of Chadwick. At the end of 1983, after receiving notification that the government was investigating their activities and at the request of the third shareholder, Ronald Cohen, Belloff, and Gold transferred their interests in Chadwick to their respective wives. A portion of the sales commissions owed to Chadwick by the 1983 limited partnerships was not received until 1984, after the transfer. A portion of that 1984 income went to the wives of Belloff and Gold, namely in the form of cash withdrawals and Keogh Plan contributions. The district court held that this income, received by the wives of Belloff and Gold after the transfer, should not be included in the gross income base of the penalties assessed against Belloff and Gold. In re Tax Refund Litigation, 766 F.Supp. at 1258. 88 The government argues, however, that Belloff and Gold bore the burden of proving that the income in question was not expected to be derived by them and failed to carry that burden. We agree. Belloff and Gold were clearly trying to diminish the penalty by transferring their interest in Chadwick to their wives. We do not believe that this transfer, without more, demonstrates that their interest in the future income has in fact been eliminated, even assuming the doubtful proposition that a genuine transfer without consideration might be recognized for these purposes. Certainly, any other rule might vitiate the effect of the penalties intended by Congress. 89 Affirmed on the appeal; affirmed in part and reversed in part on the cross-appeal.