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(A) Transferees.–-The liability, at
law or in equity, of a transferee
of property--
(i) of a taxpayer in the case
of a tax imposed by subtitle A
(relating to income taxes),
* * * * * * *
(b) Liability.–-Any liability referred to in
subsection (a) may be either as to the amount of tax
shown on a return or as to any deficiency or
underpayment of any tax.
At the outset, it should be noted that “In proceedings
before the Tax Court the burden of proof shall be upon the
Secretary to show that a petitioner is liable as a transferee of
property of a taxpayer, but not to show that the taxpayer was
liable for the tax.” Sec. 6902(a); see Rule 142(d).
Whether and the extent to which a transferee is liable is
generally determined under State substantive law. Commissioner
v. Stern, 357 U.S. 39, 45 (1958). “The applicable State law is
determined by where the transfer occurred”. Adams v.
Commissioner, 70 T.C. 373, 390 (1978), supplemented by 70 T.C.
446 (1978), affd. without published opinion 688 F.2d 815 (2d Cir.
1982). Since it is undisputed that the conveyance occurred in
Pennsylvania, we shall apply that State’s substantive law.
“‘As a general rule,’ under Pennsylvania common law, ‘when
one company sells or transfers all its assets to another, the
successor company does not embrace the liabilities of the
predecessor simply because it succeeded to the predecessor’s
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Last modified: May 25, 2011