118 T.C. No. 4
UNITED STATES TAX COURT
LARRY D. JOHNSON, TRANSFEREE, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 14096-99. Filed January 24, 2002.
R determined that P was liable as a transferee of
assets from C and, therefore, was liable for C’s tax
liabilities. P was the 100-percent owner and president
of C. The transfer to P was from a settlement that P,
C, and C’s subsidiaries had reached with a creditor. P
contends that the portion he received was in
consideration of his releasing a claim of his own
against the creditor for damages to business
reputation, so that, in effect, there was no transfer
from C. R contends that the settlement belonged to the
corporate entities and that P was a transferee.
If it is decided that the transfer was of C’s
asset to P, then P contends in the alternative that the
transfer was made for adequate consideration so that
sec. 6901, I.R.C. would be inapplicable. R contends
that under Texas law, because P was considered an
“insider”, the transfer to him was in avoidance of
creditors. P contends that he comes within an
exception to the rule relating to “insiders”. The
exception involves circumstances where the transfer to
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