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United States of America v. Thomas W. Smith; Mbna America Bank N.A.; State of California Franchise Tax Board

July 18, 2011

UNITED STATES OF AMERICA,
PLAINTIFF,
v.
THOMAS W. SMITH; MBNA AMERICA BANK N.A.; STATE OF CALIFORNIA FRANCHISE TAX BOARD;
DAVID K. JACOBS AS TRUSTEE OF THE T & E A TRUST DATED OCTOBER 1, 1993; DEFENDANTS.



The opinion of the court was delivered by: Oliver W. Wanger United States District Judge

MEMORANDUM DECISION AND ORDER RE PLAINTIFF'S MOTION FOR SUMMARY JUDGMENT (DOC. 21)

I. INTRODUCTION

Plaintiff the United States of America ("United States") proceeds with this action to reduce federal tax assessments to judgment and foreclose federal tax liens on real property.

Before the court is the United States' motion for summary judgment. Doc. 21. No Defendant filed an opposition. The motion was heard July 18, 2011.

II.FACTUAL BACKGROUND*fn1

A.The Taxpayer

Thomas Wayne Smith worked for over 44 years as a service, repair and installation technician in the heating and cooling industry. Doc. 22, ¶ 1. Mr. Smith worked part-time for a company he formerly owned, "Bell-Aire Heating and Cooling" ("BAHC"). Id.

B.The Subject Property

The real property subject to this action is located at 5251 West Decatur Avenue, Fresno, California, 93722, in the County of Fresno, State of California ("Property"). The Property is more particularly described as:

Lot 94 of Tract No. 4768, McCaffrey Community No. 7, in the City of Fresno, County of Fresno, State of California, according to the map thereof recorded in Book 60, Pages 45, 46, & 47 of Plats, Fresno County Records.

APN: 502-283-31

Doc. 22-2.

Mr. Smith purchased the Property on or about October 30, 1998. A Grant Deed transferring all right, title, and interest in the Property to Mr. Smith was recorded with the Fresno County Recorder. May 4, 2011 Deposition of Thomas W. Smith ("Smith Depo."), 7; Doc. 22-2. Mr. Smith occupied the property as his primary residence.

On October 3, 2002, a Trust Grant Deed was recorded with the Fresno County Recorder which transferred title of the Property from Mr. Smith to "TWC. Trustee: David-Keith: Jacobs." Doc. 22-3.*fn2 Mr. Smith continued to occupy and control the Property after its transfer to the TWC Trust. Smith Depo. 129.

On or about June 16, 2008, a Grant Deed was recorded with the Fresno County Recorder which transferred title of the Property from the Trustee of the TWC Property Trust to "David Keith Jacobs, Trustee of the T & E A Trust," dated October 1, 1993. Doc. 22-4. Mr. Smith continued to occupy and control the Property after the transfer to the T & E A Trust. Smith Depo. 126, 129.

C.Tax Liabilities

Revenue Officer Dennis Stiffler was assigned to secure unfiled tax returns and seek payment of Mr. Smith's unpaid tax liabilities. Doc. 21-4, ¶ 2. Revenue Officer Stiffler calculated Mr. Smith's current balance, with accruals of interest and penalties to June 16, 2011, for individual federal income tax for the tax years ending December 31, 1996, through and including 2003, as $318,752.47. Doc. 21-4, ¶ 5.

For the tax year ending December 31, 1996, the original assessment was the result of an Internal Revenue Service examination of a filed tax return. Id. at ΒΆ 3. In resolving the tax liabilities for 1996, Mr. Smith signed a Closing Agreement which included, among others, the following terms: "the T & E A Equipment Trust will be disregarded for the 1996 taxable year" and "the T & E A Equipment Trust [is] the alter ego of the taxpayer and the assets ostensibly held in the names of the trusts are the assets of the taxpayer." Doc. 22-5. Mr. Smith's ...


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