That’s the lesson Judge Goeke has for William J. Kardash, Sr., Transferee, 2015 T. C. Memo. 197, filed 10/6/15. Bill and his pal Chas. Robb are fighting old battles o’er again, on a Rule 161.

Will and Chas. lost back on March 18 this year on a Section 6091, to do with a deferred (or maybe not deferred) compensation plan, so they’re trying reconsideration.

And they get reconsideration, but all that gives them is a Rule 155 beancount, because even though they’re right to an extent, all that does is massage the numbers.

Judge Goeke: “Petitioners contend that the Court erred in valuing FECP’s [the corporate vehicle] solvency by relying on petitioners’ expert’s high estimates of FECP’s tax liabilities instead of the Federal income tax liabilities as stipulated by the parties. Although petitioners did not initially agree to and stipulate the liabilities that respondent’s expert determined, we agree with petitioners that respondent’s estimates should have been used. Moreover, petitioners point out that the Court erred when stating Dr. Shaked’s business enterprise value for the valuation date December 28, 2005.” 2015 T. C. Memo. 197, at pp. 7-8.

You remember Dr. Israel (“Bring Home the Bacon”) Shaked, the star of my blogpost “The Scottish Play,” 6/19./12.

If Dr. Israel Shaked’s too high valuation is scrapped, the corporate vehicle wasn’t insolvent in the year at issue.

But that’s not the point, says Judge Goeke, although it’s the point of this blogpost.

Turning to State law (FL), “(A)lthough we now find that FECP was solvent during 2005, the transfers were still constructively fraudulent because they were part of a series of transactions that led to the insolvency of FECP. Therefore, we find that the transfers beginning in 2005 were fraudulent because the transfers were not for reasonably equivalent value and FECP became insolvent as a result of the series of transfers.” 2015 T. C. Memo. 197, at p. 10.

Will argues he paid income tax on some of what he got, so it’s unfair to hit him for the full liability. Maybe so, says, Judge Goeke, but that’s your problem, not mine.

“Mr. Kardash alleges that he is entitled to credits against his transferee liability for taxes paid on transfers as reported dividends. Mr. Kardash argues that the Government would receive an inequitable windfall if we refused to credit him with the amounts of tax he paid on the transferred amounts in 2005, 2006, and 2007. Reconsideration under Rule 161 is not the proper avenue; section 1341 is the appropriate remedy for Mr. Kardash in this situation.” 2015 T. C. Memo. 197, at p. 11.

Bottom line: Insolvency goes step by step.