## Facts

- Stanko Packing, a Nebraska meat-packing company owned by Rudy Stanko, sold most of its assets in June 1984 for about $3.9 million, receiving $900,000 cash and a five-year installment note.
- On September 17, 1984, the corporation transferred the installment note and other assets to Rudy for no consideration, leaving the corporation insolvent.
- On September 19, 1984, Rudy transferred the installment note to his wife, Jean Stanko, without contemporaneous cash consideration.
- Jean received all installment payments from July 1985 through the note’s maturity in 1989, collecting more than $4.1 million and reporting/pay­ing deferred capital gains taxes on those payments.
- Stanko Packing dissolved in June 1985 without paying substantial federal income tax, penalties, and interest; IRS collection efforts against the corporation and Rudy were unsuccessful.
- Jean filed for divorce in July 1985; the divorce decree (July 1986) awarded her no property, maintenance, or child support and little alimony.
- The IRS pursued Jean as a transferee under I.R.C. § 6901, relying on Nebraska fraudulent conveyance law; Jean conceded the corporate-to-Rudy transfer was fraudulent but disputed that Rudy-to-Jean was fraudulent and disputed the Tax Court’s valuation of the note at about $2.8 million when she received it.

## Issues

1. Whether Jean Stanko was liable as a transferee under I.R.C. § 6901 for Stanko Packing’s unpaid federal taxes based on Nebraska fraudulent conveyance law.
2. Whether Rudy’s September 19, 1984 transfer of the installment note to Jean was fraudulent as to creditors due to actual intent to hinder, delay, or defraud creditors, or because it lacked fair consideration while Rudy was insolvent or rendered insolvent.
3. Whether alleged consideration—Jean’s later relinquishment of marital rights in divorce proceedings and her payment of capital-gains taxes on note payments—constituted fair consideration under Nebraska law.
4. Whether the Tax Court clearly erred by valuing the installment note at approximately $2,806,979 without discounting for a hypothetical purchaser’s future income-tax liabilities.

## Decision

- The Eighth Circuit affirmed the Tax Court’s judgment imposing transferee liability on Jean under I.R.C. § 6901.
- The court upheld the finding that Rudy’s transfer of the installment note to Jean was a fraudulent conveyance under Nebraska law, supported by badges of fraud (intra-family transfer, lack of consideration, insolvency, and suspicious timing).
- The court rejected Jean’s claim that divorce-related relinquishments supplied fair consideration because they were not contemporaneous with the 1984 transfer and were not shown to be reasonably equivalent to the note’s value.
- The court rejected treating Jean’s own capital-gains tax obligations as consideration benefiting the transferor.
- The court upheld the note’s fair market value at about $2.8 million and declined to reduce FMV for a buyer’s potential future income-tax burdens; the valuation was not clearly erroneous.
- The court confirmed transferee liability was capped at the note’s value when received.

## Legal Principles

- I.R.C. § 6901 supplies a procedure to collect a taxpayer’s unpaid taxes from a transferee; the existence and scope of transferee liability depend on applicable state law.
- Under Nebraska fraudulent conveyance law, a transfer is fraudulent as to creditors if made with actual intent to hinder, delay, or defraud creditors, or if made without fair consideration while the transferor is insolvent or rendered insolvent.
- Badges of fraud (including intra-family transfers, lack of consideration, insolvency, and suspicious timing) can support a finding of actual fraudulent intent.
- “Fair consideration” requires reasonably equivalent value given to the transferor; later divorce arrangements generally do not supply contemporaneous consideration for an earlier transfer absent proof of equivalence and linkage to the transfer.
- A transferee’s assumption of her own income-tax liability arising from receipt of the transferred property is not consideration to the transferor for fraudulent conveyance purposes.
- Transferee liability is limited to the fair market value of the property received at the time of transfer; FMV generally is not reduced based on a hypothetical buyer’s future income-tax consequences.

## Conclusion

The court held Jean Stanko liable as a transferee because the installment note was fraudulently conveyed to her under Nebraska law and enforceable through I.R.C. § 6901, and it affirmed valuing the note at roughly $2.8 million without discounting for anticipated income-tax effects.


Stanko v. Comm’r, 209 F.3d 1082 (8th Cir. 2000)