Ginsberg v. Comm'r of Internal Revenue, Docket Nos. 72468
| Decision Date | 31 March 1961 |
| Docket Number | 72469.,Docket Nos. 72468 |
| Citation | 35 T.C. 1148 |
| Parties | ROBERT GINSBERG, PETITIONER, v. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT.DONALD GINSBERG, PETITIONER, v. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT. |
| Court | U.S. Tax Court |
OPINION TEXT STARTS HERE
TRANSFEREE LIABILITY.— The father of the petitioners, at a time when he was insolvent and liable for Federal income taxes, with intent to make valid gifts caused a corporation of which he was the sole stockholder to cancel his certificate of stock and reissue certificates in the names of his sons, the petitioners. One of the petitioners, Robert, signed the certificates as secretary of the corporation, and the stock was thereafter held by the attorney for the corporation. The other petitioner, Donald, had not reached majority, was away from home at the times the certificates were issued, and had no knowledge thereof until a later time when the respondent notified him of a proposed determination of transferee liability. Thereafter each petitioner executed a document purporting to reassign the stock to his father. Held, that there was a valid assignment of stock to the petitioner Robert, since his knowledge of the issuance of the certificates and his acquiescence therein constituted acceptance, and that the reconveyance to his father, which was not consummated until after the issuance of the notice of transferee liability, did not have the effect of relieving him from liability, as transferee, for taxes owing from his father; but that the execution by the petitioner Donald of the purported reassignment amounted to a repudiation of the attempted gift with the result that he did not receive the stock and is therefore not liable as a transferee. Daniel Eisenberg, Esq., for the petitioners.
William F. Chapman, Esq., for the respondent.
The respondent determined that each petitioner is liable to the extent of $7,400, plus interest, as transferee of assets of his father and mother, Allen and Bess Ginsberg, for deficiencies in income taxes and additions thereto determined by the respondent against the transferors for the taxable years 1943 through 1945 as follows:
+--------------------------------+
¦Year¦Income tax¦Sec. 293(b) ¦
+----+----------+----------------¦
¦ ¦ ¦additions to tax¦
+----+----------+----------------¦
¦1943¦$25,130.15¦$12,565.08 ¦
+----+----------+----------------¦
¦1944¦43.88 ¦1,375.52 ¦
+----+----------+----------------¦
¦1945¦3,552.69 ¦1,776.35 ¦
+--------------------------------+
FINDINGS OF FACT.
Some of the facts are stipulated and are incorporated herein by this reference.
The petitioners are the sons of Allen and Bess Ginsberg, and are residents of the Borough of Brooklyn, New York City.
The above liabilities of Allen and Bess Ginsberg for income taxes and additions to tax were the subject of petitions filed with this Court on August 19, 1953, in Docket Nos. 50150 and 50151. In those cases this Court entered decisions on May 3, 1955, pursuant to stipulations of the parties, that there were deficiencies in tax and additions to tax under section 293(b) of the Internal Revenue Code of 1939, in the amounts stated above (except that in Docket No. 50150 relating to the year 1944, the amount of deficiency in tax was greater than shown above, a portion of the deficiency in tax having been paid on June 2, 1955). The above liabilities were assessed against Allen and Bess Ginsberg 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 Corp., 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 on October 28, 1946.
Allen Ginsberg caused stock certificates of the corporation to be made out in the names of the petitioners as follows: On December 22, 1953, certificate No. 4, representing 7 1/2 shares of stock was made out to Robert Ginsberg and certificate No. 5, representing 7 1/2 shares of stock was made to Donald Ginsberg; on December 10, 1954, certificate No. 7, representing 6 shares of stock was made out to Robert Ginsberg and certificate No. 8, representing 6 shares of stock was made out to Donald Ginsberg; and on January 20, 1955, certificate No. 10, representing 5 shares of stock was made out to Robert Ginsberg and certificate No. 11, representing 5 shares of stock was made out to Donald Ginsberg. All these certificates of stock 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 above stock certificates. Irving 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 petitioners, 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 those 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 petitioners. At the times the certificates were made out to the petitioners, Allen Ginsberg and Bess Ginsberg intended to make true and valid gifts to them.
The shares of stock of the corporation had the following value at the times indicated:
+--------------------------+
¦ ¦Per share ¦
+--------------+-----------¦
¦December 1953 ¦$378.63 ¦
+--------------+-----------¦
¦December 1954 ¦386.88 ¦
+--------------+-----------¦
¦January 1955 ¦396.85 ¦
+--------------+-----------¦
¦Nov. 15, 1957 ¦434.42 ¦
+--------------------------+
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 to each of the petitioners notifying each that it was proposed to assess against each the amount of $7,400, plus interest as provided by law, 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 this 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, Donald Ginsberg executed and delivered to Allen Ginsberg a document providing as follows:
KNOW ALL MEN BY THESE PRESENTS that the undersigned does hereby assign, transfer and set over unto ALLEN GINSBERG, eighteen and one-half (18 1/2) shares of the capital stock of ALLEN NEVINS PACKING CORP., as contained in the following certificates:
Certificate No. 5 for 7 1/2 shares
Certificate No. 8 for 6 shares
Certificate No. 11 for 5 shares and I do hereby irrevocably constitute and appoint ALLEN GINSBERG to transfer the said stock on the books of the said ALLEN NEVINS PACKING CORP. with full power of substitution in the premises.
On the same date Robert Ginsberg executed and delivered to Allen Ginsberg a similar document relating to the certificates in his name.
On the same date Donald wrote the following letter to his father:
I am herewith enclosing an assignment of 18 1/2 shares of stock in the Allen Nevins Pkg. Corp.
As you know, I never had possession of these shares, and until very recently had no idea that these shares had been transferred to me. Since I never received these shares, I cannot return them to you. They are probably in your lawyer's office.
Neither Robert nor Donald endorsed the stock certificates and the stock in question was not transferred to Allen Ginsberg on the corporate records.
During 1953 and 1954 and during January 1955, the petitioner Donald Ginsberg had not reached majority. From 1951 through 1958 he was away from New York, where his parents resided, attending college and medical school, except during summer months and infrequent vacations. He did not become aware of the issuance of the stock certificates in his name until he received respondent's letter of June 21, 1957.
By letter dated January 9, 1958, the respondent notified each petitioner 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 of stock in the Allen Nevins Packing Corp., amounted to $7,400.00 your liability as Transferee is limited to that amount.
OPINION.The petitioners' principal contention is that the respondent has failed to show that there was a transfer of the stock of the corporation to them, and that hence the respondent has failed to sustain the burden, imposed upon him by section 119(a) of the Internal Revenue Code of 19391 and by the similar provision of section 6902 of the Internal Revenue Code of 1954, of...
To continue reading
Request your trial
-
Schussel v. Werfel
...before he receives a notice of transferee 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......
-
Julia R. Swords Trust v. Comm'r, Docket No. 10882-10
...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 the law of the State where the transfer occurred. See......
-
In re Kardash
...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 application of Florida law:"The question for......
-
DiZenzo v. Commissioner
... ... * ... Commissioner ... Docket Nos. 72736-72739 ... United States Tax Court ... * All statutory references are to the Internal ... Revenue Code of 1939 ... A. 8) 234 F. 2d 665; and Robert Ginsberg Dec. 24,764, 35 T. C. 1148, affd. (C. A. 2) 62-2 ... ...