William L. Comer Family Equity Trust v. US
| Decision Date | 16 February 1990 |
| Docket Number | No. 87-CV-30092 PH.,87-CV-30092 PH. |
| Citation | 732 F. Supp. 755 |
| Parties | WILLIAM L. COMER FAMILY EQUITY TRUST, Myra L. Comer, Trustee; American Way Trust, Myra L. Comer, Trustee; Financial Freedom Consultants, William L. Comer, Trustee; OSA Development Company with OSA Explorations as General Partner, William L. Comer, Trustee; Burica Development Company, with Burica Explorations as General Partner, William Comer, Trustee, Plaintiffs, v. UNITED STATES of America, Defendant. |
| Court | U.S. District Court — Western District of Michigan |
Peter C. Jensen, Saginaw, Mich., for plaintiffs.
Michael Hluchaniuk, Bay City, Mich., Tom Clark, Tax Div., Justice Dept., Washington, D.C., for defendant.
FINDINGS OF FACT AND CONCLUSIONS OF LAW
This is a wrongful levy action brought pursuant to 26 U.S.C. § 7426. The plaintiffs assert that the Internal Revenue Service (IRS), in attempting satisfaction of income tax deficiencies owed by William L. and Myra Comer, levied against property owned by the plaintiffs. The government, conversely, contends that the plaintiffs are merely the "alter ego" of the taxpayers, and that therefore the IRS properly levied against the relevant property. The Court's sole function is to therefore determine, for purposes of the challenged levy, the ownership of the property at issue. The parties presented their proofs in a one day bench trial; the Court now offers its findings of fact and conclusions of law. Fed.R.Civ.P. 52.
1. Myra and William L. Comer are husband and wife, residing in Clare, Michigan.
2. On January 17, 1975, William L. Comer, as grantor, created the William L. Comer Family Equity Pure Trust (hereafter Family Trust), naming Myra Comer and Phyllis Carrow as original trustees. Phyllis Carrow is William L. Comer's mother.
3. The Declaration of Trust included a conveyance from William L. Comer to the Family Trust of the exclusive use of William L. Comer's "lifetime services" and all of his "earned remuneration."
4. The Declaration of Trust does not name beneficiaries; instead, the declaration creates "beneficial interest" certificates such that beneficiary status is determined by ownership of such certificates.
5. On January 23, 1975, by quit claim deed, Myra Comer conveyed all of her interest in real property located at 3261 E. Colonville Road, Clare, Michigan (hereafter 3261 property) to William L. Comer.
6. On January 23, 1975, Myra Comer assigned to William L. Comer all of her interest in the land contract related to the 3261 property.
7. On January 23, 1975, William L. Comer, by quit claim deed, conveyed the 3261 property to the Family Trust.
8. On January 23, 1975, William L. Comer assigned the land contract related to the 3261 property to the Family Trust.
9. On January 23, 1975, William L. Comer, by "bill of sale" indicating $10.00 in consideration, conveyed to the Family Trust the following property:
10. The property referenced in finding 9 represented virtually all of William L. and Myra Comer's tangible assets as of January 23, 1975.
11. At some point following Family Trust's creation, Phyllis Carrow resigned as trustee, and William L. Comer became trustee.
12. On May 17, 1976, the trustees amended the Family Trust to make it expressly irrevocable.
13. On December 1, 1978, the Family Trust purchased, by land contract, real property located at 9260 Colonville Road, Clare, Michigan (hereafter 9260 property), from Jerry and Pamela Trask. The Family Trust paid $10,000.00 of the $64,000.00 purchase price up front. William L. and Myra Comer signed the land contract as trustees of the Family Trust.
14. The IRS levied on the 9260 property, and this property remains the residence of William L. and Myra Comer.
15. On August 19, 1980, the Family Trust was amended. Under the amendment, the grantor, William L. Comer, became the initial sole beneficiary of the trust. Other beneficiaries approving the amendment included Scott Comer, William R. Comer, Myra Comer, and the Mount Zion Constitutional Fund, a trust created by William L. and Myra Comer.
16. On September 25, 1981, the Family Trust sold 8.8 acres of the 3261 property to Byron Benchley.
17. On May 25, 1982, the Family Trust, by land contract, sold to Carl Koehn, Winnifred Koehn, and Arvilla Wiswary 3.2 acres of the 3261 property.
18. On November 1, 1976, the Family Trust, as grantor, created Try Refining Your Education — A Trust (hereafter TRYE Trust), an irrevocable trust, naming William L. and Myra Comer as trustees.
19. On November 1, 1976, the Family Trust, by Bill of Sale, conveyed to the TRYE Trust all of its accounts receivable dating from November 1, 1976, a checking account at the Farwell State Savings Bank, and a business known as T.R.Y.E. — A Trust.
20. On January 1, 1980, the Family Trust leased the 9260 property to the TRYE Trust for $650.00 per month. Although William L. Comer is designated as trustee for the Family Trust in the lease recitals, William R. Comer signed the lease in that capacity.
21. On June 1, 1980, the TRYE Trust entered into an employment contract with William L. Comer, naming William L. Comer "Executive Trustee." In consideration of his performance of the Executive Trustee's duties, William L. Comer received a salary of $10,200.00 per year, housing, and transportation. William L. Comer signed the employment contract both as trustee for the TRYE Trust and as the contractor.
22. On July 8, 1980, the TRYE Trust was amended to provide, among other things, that the grantor was the initial and sole beneficiary of the trust. At the time of the amendment, no existing beneficiaries formally approved the amendment.
23. On January 19, 1977, William L. Comer, as grantor, created an irrevocable trust, the American Way Trust (hereafter American Trust), naming William R. and Myra Comer as original trustees.
24. On January 19, 1977, by Bill of Sale, William L. Comer conveyed to the American Trust the following property:
25. On January 19, 1977, the American Trust leased to the TRYE Trust the following property:
Although William L. Comer was not designated a trustee in the American Trust's Declaration of Trust, William L. Comer signed the lease agreement in this capacity.
26. On August 25, 1980, William R. Comer was appointed trustee of the American Trust, notwithstanding the fact that he was designated as such in the Declaration of Trust.
27. On August 27, 1980, the American Trust was amended to provide, among other things, that the grantor was initial and sole beneficiary of the trust. William L. and Myra Comer signed the amendment as trustees; William R. Scott, and Myra approved the amendment as beneficiaries.
28. On September 25, 1981, William L. Comer resigned as trustee of the American Trust.
29. On January 23, 1984, Scott Comer was appointed as trustee of the American Trust.
30. Sometime in late 1983 or early 1984, the American Trust purchased a used Lincoln Continental, with Myra Comer signing the purchase agreement as trustee for the American Trust.
31. On February 1, 1982, William L. Comer, as grantor, created an irrevocable trust, Financial Freedom Consultants (hereafter FFC), naming William L. and Scott Comer as trustees.
32. Under FFC's Declaration of Trust, the grantor was sole beneficiary of the trust. Because the declaration precluded beneficiaries from participating in the management or affairs of FFC, William L. Comer, as grantor, trustee, and sole beneficiary of FFC transferred his beneficial interest in FFC to the Family Trust.
33. On February 1, 1982, William L. Comer conveyed, by Bill of Sale, one hundred dollars in cash to FFC in consideration of one hundred dollars received from FFC, ostensibly for the purpose of opening a bank account on FFC's behalf.
34. Sometime in 1982, the TRYE Trust ceased operations. Thereafter, FFC leased the 9260 property from the Family Trust.
35. On August 10, 1984, William L. Comer received, by certified mail, a notice of tax deficiency from the IRS in the amount of $187,122.10. This notice pertained to tax years 1975, 1976, 1977, 1978, 1979 and 1980.
36. On October 19, 1984, the IRS filed a notice of tax lien with the Register of Deeds for Clare County, Michigan, indicating a lien against all of William L. and Myra Comer's property rights in the amount of $149,125.54, reflecting claimed deficiencies for tax years 1977, 1978, and 1979.
37. On February 13, 1987, the IRS served a notice of seizure upon the "William L. Comer Family Equity Pure Trust, as Nominee, Transferee, or Alter Ego of William L. Comer and Myra L. Comer." This notice pertained to the 9260 property held in trust by the Family Trust.
38. On or about February 13, 1987, the IRS served a notice of levy upon the Farwell State Savings Bank, thereby levying upon all the assets of the Family Trust, the American Trust, FFC, Burica Development Company, and OSA Development Company all as alleged nominees, alter egos or transferees of William L. and Myra L. Comer.
39. At all times relevant to this action, William L. and/or Myra L. Comer owned no certificates of deposit, stock, bonds, or other investments in their individual or joint names.
40. At all times relevant to this action, William L. and/or Myra L. Comer owned no real property in their individual or joint names.
41. All named plaintiffs maintained separate employer identification numbers.
42. Each plaintiff maintained separate bank accounts.
43. All trusts in issue herein were filed with the Clare County, Michigan, Probate Court and any and all amendments to the trusts were...
To continue reading
Request your trial
-
Audio Investments v. Robertson, No. 8:002847-20BG.
...over the past twenty years, that pure trusts and family trusts are sham transactions. See, e.g., William L. Comer Family Equity Trust v. United States, 732 F.Supp. 755 (E.D.Mich.1990), affirmed, William L. Comer Family Equity Pure Trust v. Internal Revenue Service, 966 F.2d 1455 (6th Cir.19......
-
U.S. v. Kattar
...they have relied upon law governing the disregard of the corporate form. See, e.g., id. at 1164-65; William L. Comer Family Equity Trust v. United States, 732 F.Supp. 755, 759 (E.D.Mi.1990); Loving Saviour Church, 556 F.Supp. at 691-92; see also, Village Press, Inc. v. Stephen Edward Co., 1......
-
Hatchett v. I.R.S.
...at 670 (citing Morris v. United States Dep't of Treasury, 813 F.2d 343, 345 (11th Cir.1987); William L. Comer Family Equity Trust v. United States, 732 F.Supp. 755, 759 (E.D.Mich.1990)). Once the plaintiff demonstrates this interest, the burden shifts to the Government to prove a nexus betw......
-
Marshall v. US, CV 91-3557 (MLO).
...taxpayer. Morris v. United States, 813 F.2d 343, 345 (11th Cir.1987); Hall, 1992 WL 394160 at *5; William L. Comer Family Equity Trust v. United States, 732 F.Supp. 755 (E.D.Mich.1990); Xemas, Inc. v. United States, 689 F.Supp. 917 (D.Minn.1988). This burden is appropriate when the plaintif......
-
The Pure Equity Trust: a Tax Bomb for the Unwary
...such trusts include the following: Buelow v. Commissioner, 92-2 USTC ¶ 51,518; Comer Family Equity Pure Trust v. Commissioner, 732 F.Supp. 755 (E.D.Mich. USTC ¶ 9,497 and 92-1 USTC ¶ 50,132; Gastineau Equity Trust v. U.S., 687 F.Supp. 1422 (C.D.Cal. 1987); Harrold v. Commissioner, 86-2 USTC......