Before WATERMAN, SMITH and MARSHALL, Circuit Judges.
Petitioner Robert Ginsberg and his brother Donald are the sons of Allen and Bess Ginsberg and residents of the Borough of Brooklyn, New York City. Income tax liabilities for the years 1943-45 were incurred by the parents, the assessment being made on June 2, 1955. Such liabilities, together with interest, remain due and unpaid.
As of December 21, 1953, Allen Ginsberg owned 50 shares of stock of the Allen Nevins Packing Corporation, hereinafter called the corporation, which represented all of the outstanding and issued shares. This corporation was organized under the laws of the State of New York.
Allen Ginsberg caused stock certificates of the corporation to be made out in the names of his sons as follows: on December 22, 1953, certificate #4, representing 7 1/2 shares of stock was made to Robert Ginsberg and certificate #5, representing 7 1/2 shares of stock was made to Donald Ginsberg; on December 10, 1954, certificate #7, representing 6 shares of stock was made out to Robert Ginsberg and certificate #8, representing 6 shares of stock was made out to Donald Ginsberg; and on January 20, 1955, certificate #10, representing 5 shares of stock was made out to Robert Ginsberg and certificate #11, representing 5 shares of stock was made out to Donald Ginsberg. Each certificate bore Federal transfer stamps. During 1953, 1954, and 1955, Robert Ginsberg was secretary of the corporation and the certificates bore his signature as secretary, as well as the signature of Allen Ginsberg as president. On each of the above dates a new stock certificate was issued to Allen Ginsberg representing the remaining balance of the outstanding stock.
Upon each of the above dates, Robert Ginsberg, at the direction of his father, went to the law offices of Hoffman and Rubin and signed the certificates. Irvin Hoffman, the attorney who had organized the corporation, kept in his possession the minute book of the corporation and the stock certificate book, together with the above certificates issued in the names of the brothers, until February 1958, at which time he surrendered them to Allen Ginsberg. Hoffman also kept in his possession over that period the certificates which had been issued in the name of the father, Allen Ginsberg. Upon receipt of these stock certificates in February 1958, Allen Ginsberg delivered possession thereof to his attorney, Daniel Eisenberg, in behalf of Allen Ginsberg, in whose possession they have remained ever since.
No consideration was involved in the transactions whereby the shares of stock were made out in the names of the brothers. At the time the certificates were made out, Allen Ginsberg and Bess Ginsberg intended to make true and valid gifts.
The shares of stock of the corporation had the following value at the times indicated:
December 1953 $378.63 per share
December 1954 386.88 per share
January 1955 396.85 per share
On December 22, 1953, December 10, 1954, and January 20, 1955, the liabilities of Allen and Bess Ginsberg exceeded the amount of their assets.
On June 21, 1957, the respondent mailed a letter notifying each brother that it was proposed to assess against each the amount of $7,400, plus interest, constituting his liability as transferee of assets of Allen and Bess Ginsberg, for income taxes due from the latter.This was the usual "30-day letter" in which it was stated that the recipient might file a protest and have a conference within a 30-day period. Therein it was specifically stated that the letter did not constitute a statutory notice of transferee liability, but that if, upon the expiration of the 30-day period, the recipient did not agree to the proposed determination or file a written protest, a statutory notice would be sent as provided by law.
On November 15, 1957, the petitioner Robert Ginsberg executed and delivered to Allen Ginsberg a ...