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published opinion 956 F.2d 274 (9th Cir. 1992), affd. without
published opinion sub nom. Cowles v. Commissioner, 949 F.2d 401
(10th Cir. 1991); Cordes Fin. Corp. v. Commissioner, T.C. Memo.
1997-162, affd. without published opinion 162 F.3d 1172 (10th
Cir. 1998). Accordingly, the period of limitations has not
expired, and Metro is liable for the deficiencies in its income
taxes, the section 6653 additions to tax for fraud, and the
section 6663 fraud penalty.
II. Transferee Liability
Stockholders who have received the assets of a dissolved
corporation may be held liable for unpaid corporate taxes. Sec.
6901; Phillips v. Commissioner, 283 U.S. 589, 593 (1931).
Respondent has the burden of establishing transferee liability.
Rule 142(d); sec. 6902. Pursuant to section 6901(a), respondent
may establish petitioners’ liability in equity if a basis exists
under applicable Minnesota law for holding petitioners (i.e., the
transferees) liable. See Commissioner v. Stern, 357 U.S. 39, 42-
47 (1958).
A. Respondent Established a Prima Facie Case in Equity
Respondent established that, on December 4, 1990,
petitioners knew Metro underpaid its tax liabilities for tax
years 1988, 1989, and 1990, and petitioners received, without
consideration, liquidating distributions from Metro totaling
$4,642,597 (i.e., Butler’s 141,489 BFI shares plus McGraw’s
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