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MMI regarding its payment to the Internal Revenue
Service. It is noted that there are documents in the
file indicating that you received payment on the
account receivable of MMI subsequent to the levy.
Accordingly, it is my determination that you have not
proven that the service exercised “dominion and
control” over the MMI receivable.
Discussion
Petitioners, relying on United States v. Eiland, 223 F.2d
118 (4th Cir. 1955), contend that the August 15, 1978, notice of
levy issued to MMI before MMI’s involuntary bankruptcy had the
effect of an immediate seizure by the United States of the
account receivable. Petitioners contend that, under Eiland,
respondent’s notice of levy on the account receivable, an
intangible asset, had the effect of transferring to respondent
the amount necessary to pay petitioners’ tax liability.
Moreover, petitioners contend that the August 15, 1978, notice of
levy provided respondent with possession of the account
receivable, which satisfied petitioners’ tax liability in whole.
Petitioners rely on Phelps v. United States, 421 U.S. 330 (1975);
In re Pittsburgh Penguins Partners, 598 F.2d 1299 (3d Cir. 1979);
In re Cherry Valley Homes, Inc., 255 F.2d 706 (3d Cir. 1958); and
United States v. Eiland, supra, arguing that, because these cases
arose under the Bankruptcy Act of 1898, they should be
controlling. Additionally, petitioners contend that the August
15, 1978, notice of levy transferred ownership under section 6331
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