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With respect to the fourth element, which mandates
insolvency at the time or as a result of the transfer, a debtor
is insolvent under California law “if, at fair valuations, the
sum of the debtor’s debts is greater than all of the debtor’s
assets.” Cal. Civ. Code sec. 3439.02(a) (West 1997). Respondent
contends that Mr. Espinosa’s extensive tax liabilities as of the
date of the transfer outweighed his minimal assets to a degree
more than sufficient to meet this test. Petitioner, in contrast,
claims that because the deficiency notices were invalid, Mr.
Espinosa’s debts for purposes of the insolvency calculation are
limited to the approximately $50,000 ($28,945 + $5,169 + $15,271
= $49,385) shown as owing on the returns filed in 1993.
Petitioner further points to the documentary evidence produced at
trial reflecting assets with a total value of $90,245.46 and
states on brief that Mr. Espinosa’s remaining property was worth
“approximately $100,000” at the time of the transfer. Therefore,
according to petitioner, Mr. Espinosa’s financial status was one
of solvency.
We conclude, however, that even if we accept the records
offered by petitioner, which we note are somewhat lacking in
contemporaneity, as accurately representing Mr. Espinosa’s assets
in July of 1990, we cannot agree that Mr. Espinosa was solvent.
The $93,000 to $94,000 in payments to the IRS were not made until
1991, after the transfer. Hence, at minimum and without regard
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