Ginsberg v. CIR
| Decision Date | 11 July 1962 |
| Docket Number | No. 307,Docket 27242.,307 |
| Citation | 305 F.2d 664 |
| Parties | Robert GINSBERG, Petitioner-Appellant, v. COMMISSIONER OF INTERNAL REVENUE, Respondent-Appellee. |
| Court | U.S. Court of Appeals — Second Circuit |
Frederick Siegmund, Brooklyn, N. Y. (Daniel Eisenberg, Brooklyn, N. Y., on the brief), for petitioner-appellant.
Edward L. Rogers, Atty., Dept. of Justice, Washington, D. C. (Louis F. Oberdorfer, Asst. Atty. Gen., Lee A. Jackson and Robert N. Anderson, Dept. of Justice, Washington, D. C., on the brief), for respondent-appellee.
Before WATERMAN, SMITH and MARSHALL, Circuit Judges.
Petitioner Robert Ginsberg and his brother Donald are the sons of Allen and Bess Ginsberg and residents of the Borough of Brooklyn, New York City. Income tax liabilities for the years 1943-45 were incurred by the parents, the assessment being made on June 2, 1955. Such liabilities, together with interest, remain due and unpaid.
As of December 21, 1953, Allen Ginsberg owned 50 shares of stock of the Allen Nevins Packing Corporation, hereinafter called the corporation, which represented all of the outstanding and issued shares. This corporation was organized under the laws of the State of New York.
Allen Ginsberg caused stock certificates of the corporation to be made out in the names of his sons as follows: on December 22, 1953, certificate #4, representing 7½ shares of stock was made to Robert Ginsberg and certificate #5, representing 7½ shares of stock was made to Donald Ginsberg; on December 10, 1954, certificate #7, representing 6 shares of stock was made out to Robert Ginsberg and certificate #8, representing 6 shares of stock was made out to Donald Ginsberg; and on January 20, 1955, certificate #10, representing 5 shares of stock was made out to Robert Ginsberg and certificate #11, representing 5 shares of stock was made out to Donald Ginsberg. Each certificate bore Federal transfer stamps. During 1953, 1954, and 1955, Robert Ginsberg was secretary of the corporation and the certificates bore his signature as secretary, as well as the signature of Allen Ginsberg as president. On each of the above dates a new stock certificate was issued to Allen Ginsberg representing the remaining balance of the outstanding stock.
Upon each of the above dates, Robert Ginsberg, at the direction of his father, went to the law offices of Hoffman and Rubin and signed the certificates. Irvin Hoffman, the attorney who had organized the corporation, kept in his possession the minute book of the corporation and the stock certificate book, together with the above certificates issued in the names of the brothers, until February 1958, at which time he surrendered them to Allen Ginsberg. Hoffman also kept in his possession over that period the certificates which had been issued in the name of the father, Allen Ginsberg. Upon receipt of these stock certificates in February 1958, Allen Ginsberg delivered possession thereof to his attorney, Daniel Eisenberg, in behalf of Allen Ginsberg, in whose possession they have remained ever since.
No consideration was involved in the transactions whereby the shares of stock were made out in the names of the brothers. At the time the certificates were made out, Allen Ginsberg and Bess Ginsberg intended to make true and valid gifts.
The shares of stock of the corporation had the following value at the times indicated:
December 1953 $378.63 per share
December 1954 386.88 per share
January 1955 396.85 per share
On December 22, 1953, December 10, 1954, and January 20, 1955, the liabilities of Allen and Bess Ginsberg exceeded the amount of their assets.
On June 21, 1957, the respondent mailed a letter notifying each brother that it was proposed to assess against each the amount of $7,400, plus interest, constituting his liability as transferee of assets of Allen and Bess Ginsberg, for income taxes due from the latter. This was the usual "30-day letter" in which it was stated that the recipient might file a protest and have a conference within a 30-day period. Therein it was specifically stated that the letter did not constitute a statutory notice of transferee liability, but that if, upon the expiration of the 30-day period, the recipient did not agree to the proposed determination or file a written protest, a statutory notice would be sent as provided by law.
On November 15, 1957, the petitioner Robert Ginsberg executed and delivered to Allen Ginsberg a document providing as follows:
On the same date Donald Ginsberg executed and delivered to Allen Ginsberg a similar document relating to the certificates in his name. The petitioner did not endorse the stock certificates and the stock in question was not transferred to Allen Ginsberg on the corporate records.
By letter dated January 9, 1958, the Commissioner notified the petitioner and Donald Ginsberg of his determination that each was liable, to the extent of $7,400, plus interest, as transferee of assets of Allen and Bess Ginsberg, for the unpaid deficiencies in tax and additions to tax of Allen and Bess Ginsberg. In each instance he stated:
"Inasmuch as the value of assets received by you during the years 1953, 1954 and 1955 consisting of shares in the Allen Nevins Packing Corp., amounted to $7,400.00 your liability as Transferee is limited to that amount."
The Tax Court held that, under the law of New York, petitioner was liable as a gratuitous transferee of property from his insolvent father and that he was not relieved of liability by the reconveyance since it was not fully consummated until after he received notice of his transferee liability. The petitioner thereupon filed this petition for review.
Donald Ginsberg, on the other hand, was held not liable as a transferee because, unlike petitioner, he had had no knowledge of the gift prior to notice from the Commissioner, and he thereafter repudiated it within a reasonable time.
Section 311 of the Internal Revenue Code of 1939, 26 U.S.C.A. § 311 is the governing statutory provision. It provides in part:
This provision neither creates nor defines a substantive liability but merely provides a procedure by which taxes owed by a transferor may be collected from a transferee. For the substantive elements of the transferee's liability we must look to state law. E. g., Commissioner of Internal Revenue v. Stern, 357 U.S. 39, 78 S.Ct. 1047, 2 L.Ed.2d 1126 (1958).
If there was a valid transfer of the stock from Allen Ginsberg to petitioner, there is no question but that it constituted a fraudulent conveyance under applicable New York law. Allen Ginsberg was insolvent when the alleged transfers took place, and he told petitioner the purpose was to protect himself in a tax matter. Petitioner acquiesced in this purpose, and no consideration passed from him to his father. Under New York law, assuming title to the stock passed, this was clearly a fraudulent conveyance. 12 McKinney's Consolidated Laws of New York, c. 12, Debtor and Creditor Law, § 270 et seq.
Petitioner contends, however, that no transfer occurred because there was no delivery of the stock, a prerequisite to a valid conveyance under New York law. Alternatively, he argues that even if the attempted transfer was valid, a reconveyance was effectuated before institution of proceedings by the Commissioner and he is thereby relieved of whatever liability he might otherwise have incurred. Petitioner also contends the Commissioner did not exhaust his remedies against Allen Ginsberg, the one primarily liable, as he was required to do. Finally, the argument is raised that no remedy is available under New York law when the transferee no longer has the specific property transferred. We find no merit in any of these contentions and affirm.
40 McKinney's Consolidated Laws of New York, c. 41, Personal Property Law, § 162 provides:
To continue reading
Request your trial
-
Schussel v. Werfel
...liability. See Eyler v. Comm'r, 760 F.2d 1129, 1134 (11th Cir.1985); Ginsberg v. Comm'r, 35 T.C. 1148, 1155–56, 1961 WL 1326 (1961), aff'd,305 F.2d 664 (2d Cir.1962); 14A Mertens Law of Federal Income Taxation § 53:11 (Thompson Reuters/West 2014).21 Even if there is no actual retransfer, a ......
-
Julia R. Swords Trust v. Comm'r, Docket No. 10882-10
...6901 provides the remedy or procedure to be employed by the Commissioner as the means of enforcing that liability. Ginsberg v. Commissioner, 305 F.2d 664, 667 (2d Cir. 1962), aff'g 35 T.C. 1148 (1961); Starnes v. Commissioner, T.C. Memo. 2011-63, slip op. at 15. The applicable State law is ......
-
In re Kardash
...6901 provides the remedy or procedure to be employed by the Commissioner as the means of enforcing that liability . Ginsberg v. Comm'r , 305 F.2d 664, 667 (2d Cir. 1962), aff'g 35 T.C. 1148 (1961)."16 In upholding the Tax Court's judgment, the Eleventh Circuit also affirmed the Tax Court's ......
-
DiZenzo v. Commissioner
...22 T. C. 1035, appeal dismissed (C. A. 8) 234 F. 2d 665; and Robert Ginsberg Dec. 24,764, 35 T. C. 1148, affd. (C. A. 2) 62-2 USTC ¶ 9625 305 F. 2d 664. The petitioner's liability as a transferee is to be measured by the net amount of diversions as found by us. It is true that some of the a......