Prior Corporate Shareholder Liable As Transferee

On October 14, 2005, the United States Tax Court in Tricarichi v. Commissioner²² held that the sole shareholder of a corporation was liable as a transferee under Section 6901 and Ohio law for the corporation's unpaid tax liability after he sold his stock to an "intermediary company" involved in a "Midco" transaction. In addition to the underlying tax liabilities, the taxpayer was found liable for penalties under Section 6662(a) and (h) for $6,012,777. An appeal, if taken, will lie to the US Court of Appeals for the Ninth Circuit.

Facts

In September 2003, Petitioner sold his cellular telephone business, West Side, a C corporation incorporated in Ohio, to Nob Hill, Inc., a Cayman Islands company and affiliate of Fortrend, for $35 million dollars. At the time of the sale, West Side had a net asset value of only $23.7 million, which reflected an aggregate tax liability for 2003 of $16 million. In 2003, West Side obtained total settlement proceeds of $65 million from