Today, the U.S. Tax Court issued a memorandum opinion in Tricarichi v. Commissioner of Internal Revenue, holding the petitioner liable for tax under the Ohio Uniform Fraudulent Transfer Act. In Tricarichi, the petitioner was the sole shareholder of West Side, a C Corporation, until he sold his shares to an affiliate of Fortrend International LLC, a shell company. The type of transaction in which the petitioner sold his shares is commonly referred to as an “intermediary company” or “Midco” transaction, a type of tax shelter chiefly promoted to shareholders of closely held C corporations that had large built-in gains. The shell company then merged into West Side and engaged in a sham transaction to eliminate West Side’s corporate tax. The IRS then disallowed the fictional losses and assessed the corporate-level tax against West Side. Because West Side was “judgment proof,” the IRS sought to collect West Side’s tax from the petitioner as the transferee of West Side’s cash. In its decision issued today, the Tax Court held the petitioner liable for West Side’s tax under the Ohio Uniform Fraudulent Transfer Act and concluded that the IRS may collect West Side’s tax liabilities in full from the petitioner under section 6901(a)(1) as a direct or indirect transferee of West Side.
Register now for your free, tailored, daily legal newsfeed service.
Questions? Please contact firstname.lastname@example.orgRegister
Tax Court issues memorandum decision in ‘Midco’ transaction case
Popular articles from this firm
If you would like to learn how Lexology can drive your content marketing strategy forward, please email email@example.com.
Related topic hubs
Legal Services Director
BMW (South Africa) (Pty) Ltd
"Lexology is a quick and useful indicator of developments in the legal sphere. It alerts me to changes taking place in the legal environment in South Africa that I may not otherwise have spotted or had immediate access to as a company lawyer. It definitely serves as a trigger for me to investigate such changes in the legal landscape in South Africa as they may affect my work and that of my employer. I believe that receiving Lexology provides me with a competitive advantage."