James E. Griffin and Katrina F. Griffin, Transferees - Page 20

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          their payment of credit card bills and attorney's fees and by the           
          value of the two smaller unimproved parcels which they                      
          transferred to the United States in accordance with Mr. Fisher's            
          plea agreement.                                                             
               A transferee may avoid liability for a tax deficiency under            
          a fraudulent transfer statute by reconveying the property to the            
          transferor under certain conditions.  Mendelson v. Commissioner,            
          52 T.C. 727, 735 (1969); see also Eyler v. Commissioner, 760 F.2d           
          1129, 1134 (11th Cir. 1985), affg. in part and revg. in part T.C.           
          Memo. 1983-397.  A transferee may avoid liability as a fraudulent           
          transferee by reconveying or retransferring the property to the             
          transferor prior to the Commissioner's taking action to collect             
          from the transferee.  Eyler v. Commissioner, supra at 1134.  A              
          transferee who pays the debts of his transferor, however, will              
          not be relieved of liability to the extent of the payment unless            
          the debts paid held priority over the tax claimed by the                    
          Commissioner.17  Id.  Petitioners bear the burden of refuting               
          transferee liability once the Commissioner has made a prima facie           
          showing of such liability.  Ginsberg v. Commissioner, 35 T.C.               
          1148, 1156-1157 (1961), affd. 305 F.2d 664 (2d Cir. 1962).                  

               17We note that whether a reconveyance to the transferor                
          relieves the transferee of liability is a matter of State law.              
          McLellan v. Commissioner, T.C. Memo. 1975-15.  The parties have             
          pointed us to no Florida (or Arizona) cases which would provide             
          for a contrary result on these facts.                                       

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