Court Opinion

ID: 4477448
Source: CourtListenerOpinion
Date Created: 2020-01-16 21:12:32.398624+00
Date Added: 2024-06-11T15:03:30.083309
License: Public Domain

MttRDOck, J., dissenting: There are findings that Lawrence gave cashier’s checks to the petitioner (mostly during community property years), Lawrence later used them to buy bonds, the bonds in the principal amount of $70,000 were sold by the petitioner on March 27, 1952, for the total amount of $68,287.90, the petitioner received checks in that amount, endorsed them, and they were used to pay her individual Federal income taxes for the years 1943 through 1947. The ultimate finding is made that Lawrence gratuitously transferred to the petitioner during the period April 15, 1948, to March 27,1952, property having a value of at least $68,287.90, and the petitioner is liable as a transferee to that extent. I would assume from the above that the holding of transferee liability was upon the theory that separate property of Lawrence was transferred to the petitioner and used to pay her income taxes. The giving of the cashier’s checks by Lawrence to the petitioner during the period when the community property laws were in effect would appear to be merely the receipt by the petitioner of a part of her share of community property rather than transfers of the separate property of Lawrence. Most of the checks were given during that period. I would not think that any transferee liability would result if the petitioner merely received a part of her share of the community funds during the period when the community property laws were in effect and eventually used those funds to pay her own taxes on her share of the community income. The transfer of separate property of Lawrence to the petitioner at a time when he was insolvent would, under many circumstances, impress the money in the hands of the petitioner with a trust for the benefit of creditors of Lawrence, including the taxing authorities. However, here the transferred funds were paid to the collector of internal revenue to discharge taxes owed him by the petitioner. It does not appear that she had any other available funds at that time from which she could have paid her taxes. Also it appears that a large part, if not all, of her taxes was due upon her share of community income from the activities of her husband, which income never actually came into her hands. Thus, the Commissioner received the full benefit of the transfer and suffered no detriment by reason of the transfer since but for the transfer he would not have received payment of the petitioner’s taxes. It does not appear that any equity in favor of the Internal Eevenue Service would arise under such circumstances. There is a further complication. The Commissioner determined overpayments of the petitioner’s taxes for 1945 and 1946 in the total amount of $63,005.69, which was less than the $68,287.90 received for the payment of the petitioner’s taxes. But there is no finding that the petitioner actually received the overpayments or of what was done with them or who benefited from them. The Commissioner has the burden of proof to show transferee liability, and it does not seem to me that he has succeeded. Certainly he has not succeeded as to the entire $68,287.90 unless the burden of going forward shifted at some point not clear to me. Johnson, </., agrees with this dissent.