Larry D. Johnson - Page 1

                                   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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