When a business entity is struggling to pay tax debts or other obligations, and someone proposes the transfer of its assets to a new entity owned by the same or related owners, one may ask whether the prior entity’s obligations will be enforceable against the new one. The potential for enforcement of a transferor’s tax obligations against its transferee is demonstrated by ACI Construction, LLC v. United States, 130 AFTR 2d 2022-5882, a recent decision of the U.S. District Court for the District of Utah.

Facts in ‘ACI Construction’

Sid Crookston, LLC (also known as Sid Crookston Construction (SCC)) was engaged for many years in a construction business involving improvements commonly made in connection with subdivision of land. The sole owner of SCC was Sid Crookston (Sid), but his two sons and stepson were also active in the business and eventually served the company in leadership roles.