Stuart, Jr. v. CIR, No. 15-3318 (8th Cir. 2016)
Annotate this CaseAfter Little Salt failed to pay its taxes, the Commissioner issued notices of transferee liability to the former shareholders. The tax court concluded that the former shareholders are liable for a portion of Little Salt's tax deficiency and the IRS appealed. The court agreed with the IRS that the Tax Court should have considered whether the stock sale should be recharacterized as a liquidating distribution to the shareholders under Nebraska law. However, the court declined to resolve the issue in the first instance. Accordingly, the court vacated the judgment and remanded to the tax court to consider whether the IRS is entitled to a full recovery from the former shareholders as transferees under Nebraska law.
Court Description: Murphy, Author, with Riley, Chief Judge, and Smith, Circuit Judge] Civil case - Federal Tax. The Tax Court's failure to consider whether a stock sale should be recharacterized under state law as a liquidating distribution to the shareholders; this court will not resolve the question in the first instance, and the matter is remanded to the Tax Court for consideration of whether the IRS is entitled to a full recovery from the former shareholders as transferees under Nebraska law.
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