-9-
Commissioner, 508 F.2d 462, 474 (10th Cir. 1974), affg. T.C.
Memo. 1972-127; see also Frederick v. Commissioner, 101 T.C. 35,
39-40 (1993); sec. 1.461-1(a)(3), Income Tax Regs. We conclude
that the DRO was not a part of LCL’s operating agreement for its
taxable year ended July 31, 2000, thus rendering the DRO
inapplicable to the first subject year. Accord Daine v.
Commissioner, 168 F.2d 449, 451-452 (2d Cir. 1948) (and cases
cited thereat) (retroactive order of State court not taken into
account in the setting of Federal income tax), affg. 9 T.C. 47
(1947). We turn to deciding whether the DRO applies to the
second subject year.
Second Subject Year
The parties agree that the recourse notes signed by LCL did
not in and of themselves create personal liability for HBW. See
also Wyo. Stat. Ann. sec. 17-15-113 (2007) (providing that “the
members of a limited liability company * * * are [not] liable
under a judgment, decree or order of a court, or in any other
manner, for a debt, obligation or liability of the limited
liability company”). The parties dispute whether the DRO made
HBW personally liable on those notes for purposes of applying the
at-risk rules of section 465. Petitioner argues that LCL’s
recourse creditor could in a worst case situation obtain a
judgment against LCL and cause the DRO to be enforced against HBW
so that the recourse creditor could then receive from HBW
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