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D. The Tax Court Case
Napa reported an unpaid tax liability of $474,363 on its
corporate income tax return for its year ending September 30,
1986. Respondent determined that petitioner was liable as a
transferee of Napa. Respondent sent a notice of transferee
liability to petitioner’s Tiburon residence and a copy to Ted
Merriam in Colorado.
James Merriam asked Ted Merriam to represent petitioner in
this case, and Ted Merriam agreed. James Merriam told Ted
Merriam to send the legal bills related to this case to James
Merriam.
Ted Merriam timely filed a petition in this case in 1992.
He sent copies of all documents related to the case in envelopes
addressed to James Merriam or petitioner. He designated Denver
as the place of trial, and he listed petitioner as a witness in
his pretrial memorandum.
The case was submitted fully stipulated under Rule 122 in
1994. Ted Merriam signed the stipulation of facts without
discussing it with petitioner. In an opinion filed in this case
on September 6, 1995, we found that petitioner was the sole
director and shareholder of Napa, James Merriam made all
decisions for her regarding Napa, she had borrowed money from
Napa as shown by promissory notes bearing her signature, she
caused Napa to be liquidated, and, as part of the liquidation,
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