Dori R. Merriam, Transferee - Page 9

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          she distributed to herself cash and a note and canceled                     
          promissory notes that she had signed.  We held that petitioner              
          was a transferee of Napa under former Colo. Rev. Stat. sec. 7-5-            
          114(1)(c) (1986) (Director Dissolution Statute) because she                 
          caused the corporation to liquidate, and she distributed                    
          corporate assets to herself.  Merriam v. Commissioner, T.C. Memo.           
               We entered decision that petitioner was liable as a                    
          transferee for Napa’s 1986 income tax and additions to tax for              
          1986 in the amount of $1,154,034.56.  The case was appealed to              
          and affirmed without published opinion by the U.S. Court of                 
          Appeals for the Ninth Circuit.  Ted Merriam discussed collection            
          alternatives with James Merriam after the decision became final.            
               Ted Merriam never spoke to petitioner about the case.  He              
          believed that: (a) Petitioner had signed Napa corporate                     
          documents; (b) petitioner knew that she was a shareholder,                  
          director, and officer of Napa; (c) James Merriam kept petitioner            
          informed of important business and tax matters; and (d)                     
          petitioner had expressly authorized James Merriam to act on her             
          behalf in this case.                                                        
          E.   Sale of the Tiburon Residence                                          
               On February 22, 1996, IRS agent Michael Buttress (Buttress)            
          went to the Tiburon residence and gave petitioner some                      

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