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Hence, State law establishes a period of limitations for actions
under the California Fraudulent Transfer Act that expires 4 years
after the date of the transfer, with a possibility for extension
in the case of actual, as opposed to constructive, fraud.
II. Contentions of the Parties
Respondent contends that transferee liability may be imposed
upon petitioner pursuant to section 6901 on the grounds that Mr.
Espinosa’s transfer of stock was both actually and constructively
fraudulent under California law. According to respondent,
because Mr. Espinosa transferred his Lidak shares to petitioner
for no consideration, at a time when his unpaid taxes exceeded
the value of his remaining assets, the transfer was, at minimum,
constructively fraudulent. Respondent further maintains that
assertion of transferee liability is not barred by any statute of
limitations; the notice of transferee liability was sent within
the time period prescribed by the Internal Revenue Code, and this
Federal limitations period is not affected by differing limits
under State law.
Conversely, petitioner argues that respondent is precluded
from making a transferee assessment, at least on any basis other
than the taxes stated as due in the filed returns, because no
valid deficiency determination or assessment exists against Mr.
Espinosa. Petitioner contends that because the 1989 notices of
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