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Following respondent’s concession that none of petitioners
are liable for section 4952(a)(2) excise taxes or section 6662(a)
accuracy-related penalties, we are left to decide: (1) Whether
Joyce Caracci, Michael Caracci, Victor Caracci, Vincent Caracci,
Christina McQuillen, and the Sta-Home for-profit entities are
liable for excise taxes under section 4958 because of the
transfers of assets from the Sta-Home tax-exempt entities to the
Sta-Home for-profit entities in exchange for the transferees’
assumption of the transferors’ liabilities (the asset transfer);
(2) whether Michael Caracci, Vincent Caracci, and Christina
McQuillen, as shareholders of the Sta-Home for-profit entities
but not of the Sta-Home tax-exempt entities, are liable for
income taxes in connection with the asset transfer; and
(3) whether the asset transfer resulted in a revocation of the
Sta-Home tax-exempt entities’ tax-exempt status on account of a
violation of section 501(c)(3); i.e., the transfer resulted in
the Sta-Home tax-exempt entities’ being operated for a
substantial nonexempt purpose, constituted prohibited inurement,
and impermissibly benefited private interests.4
4 The parties also dispute who bears the burden of proof as
to the central issue in this case; namely, the value of the
transferred assets. We do not decide that dispute. Our findings
of value are based on our examination of the evidence in the
well-developed record, which, in relevant part, includes
stipulated facts, expert reports, other exhibits, and witness
testimony.
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