Colleagues have denounced the trend toward more continuing education (whether legal or professional) as a “racket,” or as “the Bar Associations’ Sustentation Act.” I’m of two minds about the subject.

Some programs are overpriced and of minimal usefulness. Many of the freebies are puff pieces and nearly worthless (I mean, how many lectures on the same timeworn topics can one ingest? And they don’t even serve drinks).

But there was an IRS webinar today on the Section 263 and Section 263A safe harbors for capitalists (I mean those who must capitalize their expenses) that was basic, but enlightening. And tomorrow there’s a law firm’s program on Tax Court practice that should be well worth attending.

At least I’ve been spared another “win your case at discovery,” at which IRS counsel appear to be the most faithful attendees.

And today STJ Daniel A. (“Yuda”) Guy has yet another installment of the perpetual discovery joust between Eaton Corporation and Subsidiaries, Docket No. 5576-12, filed 7/15/15, and the IRS.

Once again IRS claims (a) the stuff’s not privileged and (b) if it is they waived it. Of course this is the Section 7525 preparer cloak, and STJ Yuda got an in camera look-see bucked to him by Judge Kerrigan back in June.

Well, the Eatonians win this one, mostly.

STJ Yuda: “The … documents comprise internal emails, memos, and data compilations exchanged between petitioner’s employees and petitioner’s legal counsel …, and tax practitioners at [X] and [Y]. The documents generally were prepared or generated between 2009 and early 2012 in support of petitioner’s efforts to identify and correct errors in its advance pricing agreement annual reports submitted to the Internal Revenue Service (IRS) for a number of taxable years. Petitioner’s privilege claims are sustained. The Court’s review of the … documents shows that they qualify for protection under the attorney-client or tax practitioner privilege and/or the work product doctrine.” Order, at p. 2 (Names omitted, but the shoes are of the whitest).

For the benefit of those who tuned in late, see my blogpost “Advance and Retreat,” 6/26/13, for the backstory.

But there’s always more.

“During 2009 and 2010, in the course of an examination of petitioner’s tax returns, IRS personnel interviewed a substantial number of petitioner’s employees in the United States, Puerto Rico, and the Dominican Republic, as well as representatives and owners of electrical supply companies that distributed petitioner’s products. IRS attorneys also met with petitioner’s outside attorneys and tax practitioners. The [X] Notes, which were drafted by tax practitioners employed at [X] who attended the interviews and meetings, are best described as transcriptions or summaries of the interviews and meetings. Although the notes do not appear to include the mental impressions, conclusions, opinions or legal theories of any attorney or tax practitioner, the notes nevertheless constitute protected work product. Under the circumstances, the Court may order disclosure of the documents if respondent can show a ‘substantial need’ for the material and an inability to procure equivalent information ‘without undue hardship.’ Fed. R. Civ. P. 26(b)(3). Respondent has failed to make either showing.” Order, at pp. 2-3.

Why do any work (like asking your own people what happened) when you can demand other peoples’ notes?

Once again IRS claims waiver. I don’t fault them for that, it’s as well to use all the ammo you have.

Now there’s at least a soupçon of a hint that the Eatonians will claim the Section 6694 cover of reasonable reliance, and therefore what info they told their mayvonnim may well be the subject of IRS scrutiny.

But STJ Yuda, wise to the wiles of counsel, leaves that for Judge Kerrigan on the trial. As Robbie Frost remarked “Before I built a wall I’d ask to know/ What I was walling in or walling out.”

IRS seems also to be a disciple of The Poet Laureate of Vermont. “Something there is that doesn’t love a wall,/ That wants it down.”

So Judge Kerrigan can decide whether good fences make good neighbors.

Until the Golden-Cheeked Warbler Sings

Unhappily, this delightful little creature’s warble can’t save the Section 170 conservation easement deduction for Bosque Canyon Ranch, L.P., BC Ranch, Inc., Tax Matters Partner, 2015 T. C. Memo. 130, filed 7/14/15, as Judge Foley finds the Bosquers story is for the birds.

As a point of interest, “…the golden-cheeked warbler, [is] an endangered species of bird endemic to, and nesting only in, Texas.” 2015 T. C. Memo. 130, at p. 4.

The lands now or formerly of the Bosquers included the habitat of the golden-cheeked warbler, but the deed of conservation easement also provided for the Bosquers and the North American Land Trust (NALT), the Section 501(c)(3) guardian of the conserved, to make internal shifts of the servient tenement (no, not the crash pad for extras from “Fifty Shades of Grey,” rather the encumbered premises).

Besides that, the Bosquers also “…retained various rights relating to the property, including rights to raise livestock; hunt; fish; trap; cut down trees; and construct buildings, recreational facilities, skeet shooting stations, deer hunting stands, wildlife viewing towers, fences, ponds, roads, trails, and wells.” 2015 T. C. Memo. 130, at p. 5. Hardly “forever wild,” even by Texas standards.

Finally, the Bosquers sold partnership interests in the deal (for which they claimed an $8.4 million charitable deduction on account of Warblerville) to various unrelated types, who incidentally got homesites in land adjoining Warblerville.

So we have non-partnership with a disguised sale. Disguised sale applies even where a partnership isn’t a partnership; “See sec. 1.707-3(a)(3), Income Tax Regs. (‘If a person purports to transfer property to a partnership in a capacity as a partner, the rules of this section apply * * * even if it is * * * [subsequently] determined * * * that such person is not a partner.’).” 2015 T. C. Memo. 130, at p. 15, footnote 5.

Now all the disguised sale business comes up post-TEFRA, but that’s OK, as IRS has burden of proof and sustains it.

Finally, when it comes to the conservation easement, we have The Case of the Incoherent Conservator.

“The reference to the Site Survey Report in the 2005 baseline documentation’s table of contents indicates that the table of contents was not prepared until March 2007, at the earliest. In addition, the Site Survey Report included in the 2007 baseline documentation was based on a 2004 … visit. Thus, it failed to provide a timely and accurate description of the property subject to the 2007 easement. Petitioners also could not explain why the 2007 baseline documentation included photographs taken in November 2008. In rambling, incoherent testimony, A, president of the NALT, failed to clarify these glaring inconsistencies. He appeared to be unfamiliar with the baseline documentation; did not know when it had been prepared or who had prepared various portions; and admitted he ‘never felt that we had to stop preparing a baseline at some artificial date’ and that portions of the documentation (e.g., a map purporting to reflect the habitat of the golden-cheeked warbler) were ‘fairly imprecise’. 2015 T. C. Memo. 130, at p. 14. (Name omitted.)

Now there was a decent appraisal in there somewhere, so the Bosquers wanted the good faith bailout from the 40% overvaluation chop (the conservation easement was worth zero after the Bosquer reservations were done with it).

But Judge Foley isn’t having any. “Notwithstanding its actions relating to the qualified appraisal of the 2005 easement, [Bosquers] did not act reasonably or in good faith with respect to the documentation requirements of section 1.170A-14(g)(5)(i), Income Tax Regs. The 2005 baseline documentation was insufficient, unreliable, and incomplete, and [Bosquer]’s submission of this documentation to the NALT did not constitute a reasonable attempt to comply with section 170 and the related regulations. R failed to effectively supervise or review the NALT’s slipshod preparation of the baseline documentation and [Bosquers] thereby failed to satisfy its responsibility relating to the preparation of the documentation. Any reliance on the NALT by [Bosquers] was accordingly unreasonable.” 2105 T. C. Memo. 130, at p. 21.

The golden-cheeked warbler sang.

The employee benefits professionals have been waiting for the axe to fall on the split-dollar deals. We’ve already seen the end of the beginning as far back as August, 2012; see my blogpost “The Split,” 8/29/12.

Judge Laro needed 114 (count ‘em, 114) pages to dispose of the six test cases that decide the fate of the Sterling Benefit Plan. They’re grouped under the caption Our Country Home Enterprises, Inc., et al., 145 T. C. 1, filed 7/13/15.

Starting with Marbury v. Madison, 1 Cranch (5 US) 137 (1803), and waltzing through the obligatory Chevron-Mayo pas de deux, Judge Laro upholds Reg. 1.61-22(b)(2)(ii) and its siblings.

The Sterling maneuver promised tax deductions for premium payments on corporate employees’ life insurance policies, with beneficiaries getting the benefit if the employees died, or, as more likely, the employees got the cash value of the policies if they didn’t. And the scheme was used even for non-life insurance benefits, but that doesn’t change the result.

So these are compensation to the employees and non-deductible by the employer.

A key feature in the implosion is the individual underwriting done by the carrier on the insured employees, defeating the argument that these were Section 79 group term policies. Group term policies aren’t individually underwritten.

And none of the taxpayers disclosed the listed transactions, earning them the 30% chop.

I’m sorry that this post is delayed, but it’s been a busy day.

As Congress ponders whatever Congress ponders, there wafts through the Capitol the Ogden Sunseteers’ latest hotflash, setting before the elected representatives of the people the lives and miracles of the Mighty Forty-Three who staff the Whistling Squad.

Our course, the Ogden Sunseteers once again justify their membership in the Charles Dickens Alumni Association, G. B. Shaw Division, by “demonstrations that the administrative departments were consuming miles of red tape in the correctest forms of activity, and that everything was for the best in the best of all possible worlds.”

There are some legislative proposals, the usual concern for the rights of the taxpayer and the protection of whistleblowers from retaliation, and the lament that the sequester cut down on the payoffs to those who negotiated the giant slaloms and moguls on the trail to the payout windows.

Here’s the story. http://www.irs.gov/pub/whistleblower/WB_Annual_Report_FY_14_Final_Signature_June_11-signed%20corrected.pdf

Petition

No, not the 1929 Billy Rose, Vincent Youmans and Edward Eliscu hit “Great Day,” which begins thus, although Charles M. Haden, Jr. & Shelley W. Haden, et al., Docket No. 18974-12L, filed 7/10/15, might cause them to shout “there’s gonna be a great day.”

IRS hit Chas & Shel with both a NFTL and a NITL.

While the NFTL sticks, because Chas & Shel never made a proposal as regards the equity in their home, which was the sticking point in the CDP regarding the NFTL, and Judge Goeke agrees, there’s something to be said for dropping the NITL.

Lifting the lien would leave IRS hanging for mucho diñero, as they say in Houston, TX, where this off-the-bencher was tried. Chas & Shel never contested liability, or dealt with the equity issue except to talk about it. And the SO was aware that Chas has Parkinson’s Disease.

NFTL stands.

But NITL is another story.

“Petitioners sought compromise of those liabilities but provided no concrete basis on which that compromise would have protected Respondent ‘ s interest in the equity in Petitioners’ home.

“However, we also note that a levy for the full amount of the tax liabilities and additions to tax would have left the Petitioners without any resources at a time when Mr. Haden was very ill.

“We also note that there was confusion as to the last conversation between the settlement officer and Petitioners’ representative regarding the…liabilities…. The settlement officer seemed confused about whether the Petitioners were seeking to obtain a loan on their property or needed more time to put the home for sale.

“The testimony is not consistent upon this, and the settlement officer himself admitted that his statement in the notice of determination was incorrect regarding the basis on which he decided to issue the notice of determination….” Order, at p. 10.

Now I’m sure, astute reader, you will say “Mein! Was ist das? Trial testimony on a CDP abuse-of-discretion review? What happened to the record rule?”

Well, Judge Goeke has some ‘splainin’ to do, and he does it.

“The evidence in this case consists of stipulations, exhibits, and testimony of the Petitioners, Petitioners’ representative at the time of the hearings before the settlement officers, and the settlement officers of the Internal Revenue Service.

“Respondent objected to the additional testimony, asserting that the Court should rely simply upon the administrative record in the case. However, the Court determined that the administrative record was insufficient to fully describe the circumstances of the interaction between Petitioners’ representative and the settlement officers.” Order, at pp. 2-3.

Anyway, at close of play Chas & Shel can keep their house for the moment, albeit with lien in place, as Judge Goeke decides that’s the least intrusive approach, balancing the interests of the US taxpayer (and I’m a big-time fan of the US taxpayer for personal reasons) and Chas & Shel.

Now the second part of today’s installment of Taishoff on Tax Court.

Peggy Moore Knoelke, et al., Docket No. 5422-12, filed 7/10/15, has real problems, which even that Obliging Jurist Judge David Gustafson can’t solve.

Peg’s cases had been closed by stipulated decisions last year. But now CDP notices rain down on Peg and hubby Mike.

Judge Gustafson: “Mrs. Knoelke stated that her husband recently had a stroke and lives in an assisted living facility and that she has power of attorney and guardianship over his affairs. Upon receiving the CDP Notices Mrs. Knoelke stated that she completed the appropriate Form 12153, Request for a Collection Due Process or Equivalent Hearing, and timely mailed them with the appropriate power of attorney forms to the IRS on behalf of her husband.

Mrs. Knoelke says she attempted to contact the IRS regarding the CDP Notices and Forms 12153, but that she was informed by the IRS that they did not receive either Form 12153 requesting a CDP hearing and that they could not speak to her regarding her husband’s tax matters because there was no power of attorney on file. Mrs. Knoelke stated that she has attempted to contact the IRS on several occasions with the same result. Mrs. Knoelke states that the IRS has begun levying payment from Mr. Knoelke’s social security benefits, despite the submission of CDP requests on his behalf. She contacted the Court to seek assistance.” Order, at pp.1-2.

The one thing Peg doesn’t have is a petition.

Judge Gustafson: “We do not have pending before us in this Court any petition for Mr. or Mrs. Knoelke. We therefore lack jurisdiction over any administrative dispute between Mrs. Knoelke (as power of attorney for Mr. Knoelke) and the IRS. Section 6330(e)(1) allows a taxpayer to file a petition in this Court to enjoin a levy action under certain circumstances, but no such petition has been filed by the Knoelkes.” Order, at p. 2

And he orders Peg to make note of this.

Judge Gustafson is such a good guy I’ll even forgive his characterization of Peg as “power of attorney for Mr. Knoelke.” No, she’s a “Representative,” according to Form 2848. The Form 2848 is a Power of Attorney.

So here’s a couple takeaways (hi, Judge Holmes).

Takeaway No 1. – Practitioner, don’t be buffaloed by the record rule. If the record doesn’t have everything it should have, move to permit testimony. But have a good reason why.

Takeaway No. 2 – The petition is the key to the Tax Court door. If you want the Tax Court door to swing open, remember the Orpheus of 106th Street, Edward Kennedy Ellington and Irving Mills in their 1931 classic: “It don’t mean a thing if it ain’t got that swing.”

No, this is not the Section 642 remotely-possible gambit; this is the Section 6751(b)(1) personally-signed-by-Boss-Hoss gambit, played by Larry and Lorna Graev.

That Obliging Jurist, Judge David Gustafson, saw merit to Larry’s and Lorna’s maneuver, and I, even I, applauded it. See my blogpost “Penalty Kick,” 7/17/14.

Well, though the “evil men do lives after them,” maybe so, the gambits live on.

And who better to plumb the depths of the 6751(b)(1) penalty dodge than The Great Dissenter, a/k/a The Judge Who Writes Like A Human Being, s/a/k/a The Indomitable, Illustrious, Irrefragable, Indefatigable, Incontrovertible Foe of the Partitive Genitive, His Honor Judge Mark V. Holmes?

In fact, so taken is His Honor with the clever stratagem of Larry’s and Lorna’s astute counsel, The Pride of Hackensack (good job, gang!), that in no fewer than three (count ‘em, three) designated hitters, he hands the open mike to counsel and petitioners in all therein, to mimic Fred and Ginger, and face the music and dance. And sing.

“Since one of the aims of Tax Court is the uniform interpretation of the Code, the parties should also note that in at least one similar case the taxpayers have raised an issue under IRC § 6751(b) when respondent asserts this penalty. See Graev v. Commissioner, Dkt. No. 30638-08. The issue has been extensively briefed in Graev, and may also be lurking in this case as well. If it is, the Court invites the parties to develop any relevant facts at trial and address the issue in posttrial briefs.” Anthony M. Kissling & Suzanne R. Kissling, Docket No. 19857-10, filed 7/9/15, at p. 2.

Getting the same invite are our old friends Kumar Rajagopalan & Susamma Kumar, et al., Docket No. 21394-11, filed 7/9/15. Kum and Sus starred in my blogpost “Old-Time Head-Banging,” 6/5/15.

Of course, exactly how counsel are to lay paws upon the extensive briefs of this issue buried in the Graev case (sorry, guys) is nowhere stated. Perhaps the Graevs’ counsel might let the fellow-sufferers take a wee gander.

No opinions from the Glasshouse at 400 Second Street, NW, today, but there’s a designated hitter from The Great Dissenter, a/k/a The Judge Who Writes Like a Human Being, s/a/k/a The Imperturbable, Indefatigable, Illustrious, Irrefragable and Incomparable Foe of the Partitive Genitive, and Old China Hand, Judge Mark V. Holmes.

And this one comes from the same protester whose exhumation of the U. S. Court for China set up my final sobriquet for Judge Holmes.

The continuing saga of Robert A. Morgan, Docket No. 21778-14, filed 7/8/15, gives me my text for today.

Judge Holmes gave Robert A the Section 91(f) deemed-stipulated treatment and the Section 6673 yellow card. See my blogpost “Good Luck, and Sorry ‘Bout That,” 4/24/15.

Was Robert A downhearted? No!

“He nevertheless appeared at calendar call, and moved to dismiss his own case for lack of jurisdiction. His reason, as best we could tell, was that he didn’t recognize the jurisdiction of the United States over him. He did not explain why he brought a case in a court that he alleged had no jurisdiction.” Order, at p. 1.

Well, Judge Holmes, do you expect logic?

Whatever Robert A’s rationale, there was a SNOD and a timely petition, and Section 7459(d) says once that happens, a dismissal means entry of decision in favor of IRS.

When thus advised, Robert A asked for dismissal so he could appeal to Eighth Circuit.

Taking a leaf from Judge David Gustafson’s obliging jurisprudence, Judge Holmes hands Robert A a decision.

Of course, if Robert A is consistent, Eighth Circuit doesn’t have jurisdiction either.

I have a feeling Robert A is entered in the latest running of the Section 6673 Derby. I make him 8-to-5.

 Or, “Prejudge Not, Lest Ye Be Prejudged”

 Live and learn, I always say. In my blogpost “Deep in the Heart of Texas,” 4/10/15, I asked what State law has to do with prejudgment interest on transferee tax liability.

Judge Laro answered my question in Richard H. Cullifer, Transferee, Docket No. 20177-11, filed 5/13/15, which I just picked up. Sorry for the delay.

“In a transferee liability case the Commissioner is entitled to recover prejudgment interest to the extent that such interest is authorized under the applicable State law. See, e.g., Rubenstein v. Commissioner, T.C. Memo. 2010-274, 2010 WL 5071596, at *l-2.” Order, at pp. 1-2.

Though Judge Laro takes a look at Texas law, it really doesn’t matter. Texas law allows prejudgment interest from written notice of claim.

“Texas courts define a claim as ‘a demand for compensation or an assertion of a right to be paid.’ Respondent asserts that he notified petitioner of the claim in writing in the form of a letter… informing petitioner that a transferee liability investigation of petitioner was being conducted. On the basis of respondent’s characterization of this letter as a notification that respondent was conducting an investigation, we cannot conclude that it constituted a written notice of claim under Texas law. If respondent were to be entitled to prejudgment interest under Texas law, the prejudgment interest would therefore begin to accrue from the earlier of 180 days from respondent’s issuance of the notice of liability… or petitioner’s petition filing…. We need not examine whether respondent may be entitled to prejudgment interest post-dating the notice of liability. Respondent concedes that he is not entitled to collect prejudgment interest after the issuance of the notice of liability because section 6601 allows for interest to accrue as of that date. Respondent therefore concedes his entitlement to any prejudgment interest.” Order, at p. 2.

And anyway, IRS’s numbers for whatever interest IRS is entitled to don’t add up, and Cullifer’s do.

Always glad to learn, and pass learning along.

Or, This Hog Don’t Git Et

No, today’s installment doesn’t involve transfer pricing agreements, Section 482 minutiae, or multi-million-dollar deficiencies, like Eaton. Nor yet ammonia-scented Texan Midco deals, like Cullifer.

We’re down on the line with George Lawrence Starke, 2015 T. C. Sum. Op. 40, filed 7/7/15. George is no stranger to Our Nation’s Capital, having been a star lineman for the Washington National Football League team (the Team That Dare Not Speak Its Politically Incorrect Name), and is better known as “Head Hog” to a generation of football fans.

After his playing days, Head Hog started a training school for inner-city youths, a not-for-profit that taught automotive repair skills, using Head Hog’s Ford dealership as a base.

Head Hog shifted from running the show to fundraising, and eventually left.

Before he did, he ran up some impressive numbers on the company AmEx. Management decided to treat all the non-business items as advances to Head Hog, and docked his pay for some years. Head Hog thought the docking had to do with taxes or health insurance. IRS has a letter from the not-for-profit stating the policy of treating the personal plasticity as advances. Head Hog says he never saw that letter.

Now the SNOD here includes a couple years (hi, Judge Holmes) before the letter. And the SNOD is based on a 1099-MISC the not-for-profit sent Head Hog the year he left, which Head Hog never reported. And the year Head Hog left is the year at issue.

Judge Buch dives on the loose ball, and Head Hog is saved.

“Section 61 defines gross income as ‘all income from whatever source derived’. Income can include the forgiveness of indebtedness or compensation for services. In some instances, compensation can be advanced with services to be performed later. The distinction is an important one. An advance on services to be performed in the future is taxed at the time of the advance. In contrast, income from the discharge of indebtedness is taxed at the time ‘it becomes clear that a debt will never have to be paid’.

“Whether an amount is an advance or a loan turns on the question of whether a debtor-creditor relationship was established at the time the funds were disbursed. In the case of a loan, which is not included in income at the time the funds are disbursed, the parties agree that the amount will be repaid and the debtor-creditor relationship is established at the outset. However, an advance that is considered compensation for services, albeit services to be rendered in the future, constitutes taxable income in the year it is received.” 2015 T. C. Sum. Op. 40, at pp. 6-7. (Footnotes, and there are many, omitted).

Even though the not-for-profit docked Head Hog’s pay for the personal plastic, Head Hog claimed he didn’t know why. In any event, there’s no sign a debtor-creditor relationship was intended.

OK, so the plastics are advances?

Judge Buch doesn’t care: “Because we agree that the payments were not loans, we would ordinarily look to whether the payments are considered advances; however, whether the payments are advances is irrelevant in this case because all of the items recorded by [not-for-profit] as advances or prepaid expenses were recorded for years that are not before the Court. According to [not-for-profit’s] general ledgers, all of the payments were made before [year at issue]. Because advances are taxable for the year in which they are paid, any advance would have been taxable for years that are not before us.” Order, at p. 9.

Therefore, the adjustments in the SNOD are out (wrong year), and Head Hog owes no penalty.

And if the SOL has run on the years when advances were made, Head Hog is in the end zone.

The confusion concerning the role of State law in the Section 6901 transferee liability extravaganza goes on unabated.

Judge Lauber denies a two-week-old summary J motion from Red River Ventures I, L.P., Docket No., 3030-14 filed 7/6/15. And he does it without even waiting for a reply from IRS.

A real quick-kick, this.

And Judge Lauber’s reasoning?

After the usual bow to “movant has burden and non-movant gets all the breaks,” here’s the punchline.

“This case appears to involve an ‘intermediary company’ (or ‘Midco’) transaction that may be substantially similar to transactions described in IRS Notice 2001-16. Upon careful review of the parties’ filings to date, and viewing the facts and the inferences drawn from them in the light most favorable to respondent as the nonmoving party, we conclude that there are genuine disputes of material fact that preclude summary judgment. Important factual issues in this case may include the actual or constructive knowledge of petitioner, its principals, and its advisors; such issues are rarely, if ever, susceptible to resolution by summary judgment.” Order, at p. 1.

Now, does the subjective intent, or actual or constructive knowledge, of the transferee, against whom liability is asserted under State law, have anything to do with liability? It seems Wisconsin says no (see my blogpost “Gude Faith, He Maun Fa’ That,” 6/22/15, as Sandy Shockley comes unglued under Badger State law), but I don’t know that Texas really answers the question, and the Red River boys are in the Lone Star State.

Y’all recollect Richard H. Cullifer, the star of my blogpost “Cullifer’s Travails,” 10/8/14? Judge Laro found that Cullifer knowingly made the deal to defeat, delay and hinder IRS, especially since his trusty lawyer, Board-certified tax guru Robert Thomas, Esq., sent a bunch of warning shots in Richard’s direction.

But what if he hadn’t? What if Cullifer was a true innocent, unwarned by diligent and honest counsel, and inveigled into a scheme from a wily but superficially aboveboard fraud merchant?

More to the point, why is transferee’s state of mind relevant? Doesn’t the Uniform Voidable Transactions Act (or Uniform Fraudulent Transfers Act, although “fraudulent” may well be a misnomer) look to protect the creditor?

The ostensible taxpayer was stripped of assets, leaving the IRS to whistle for the taxes properly due on account of the strip. The stripper fled; and the Red River boys were sitting with some of the loot from the strip.

Of course, knowledge may go to mitigate or abate penalties. I doubt, however, that the penalty issue is what Judge Lauber is dealing with here.

Any Texas lawyers want to weigh in here?