Shockley v. Commissioner of Internal Revenue

The Eleventh Circuit affirmed the decisions of the tax court upholding the Commissioner's transferee liability assessment against petitioners. Terry and Sandra Shockley sold their company, SCC, and reported their gains from this sale on timely federal income tax returns for calendar year 2001. The Commissioner assessed additional tax liabilities against SCC and thus asserted transferee liability under I.R.C. 6901 against each of eight of the largest selling shareholders of SCC. The court held that the tax court appropriately used substance over form and its related judicial doctrines to determine the true nature of the transaction at issue. The court agreed with the Commissioner, the tax court, and the Seventh Circuit that substance-over-form analysis was appropriate in context of the Wisconsin Uniform Fraudulent Transfer Act. Under the circumstances, the Commissioner was permitted to assess transferee liability for unpaid taxes against petitioners by applying the procedural device supplied by I.R.C. 6901. View "Shockley v. Commissioner of Internal Revenue" on Justia Law