The opinion of the court was delivered by: SHAPIRO
Plaintiffs, beneficiaries of a Trust that conveyed all its shares to a corporation in return for real estate entitled in the name of the corporation, brought this equity action in the Court of Common Pleas of Bucks County to restrain Internal Revenue Service Officer Crawford from obtaining possession of the property in his capacity as sole director of the corporation, R.E.D., Inc. Defendant Crawford removed the action to federal court by stipulation without waiving the objection of the Internal Revenue Service (IRS) to the jurisdiction of the removal court. Plaintiffs claim the IRS attempted to deny R.E.D., Inc. its rights guaranteed by the Internal Revenue Code and by the Due Process Clause. Plaintiffs further claim that the IRS, unless enjoined, will be permitted to subvert the Code by denying R.E.D., Inc. the right to litigate in the Tax Court. Plaintiffs also question whether the IRS had a right to make a jeopardy transferee assessment against the Trust, whether the IRS's actions are authorized by law, and if so, whether the IRS followed the required procedures. Following a non-jury trial on stipulated facts and documentary evidence, the Court makes the following Findings of Fact and Conclusions of Law.
1. In 1975 the Commissioner of the Internal Revenue Service issued to Manfred and Jennie DeRewal a notice of deficiency in income tax for the year 1969 of $91,273.90 and additions in tax of $30,208.89 in the total sum of $121,482.79.
2. On May 5, 1975, Manfred and Jennie DeRewal timely petitioned the Tax Court (Docket No. 3839-75) for a redetermination.
3. On December 17, 1975, Manfred and Jennie DeRewal executed a document, denominated "Declaration and Deed of Trust," naming themselves as Trustees for Deborah DeRewal, Jennifer Shaak, Pamela Loeffler, Denise DeRewal, Bruce DeRewal and Manfred DeRewal, Jr., who were all the natural children of Manfred DeRewal, Sr. and Jennie DeRewal.
4. On December 17, 1975, three of the children formed a Pennsylvania corporation, R.E.D., Inc.
5. Following the incorporation of R.E.D., Inc., the Board of Directors met and accepted offers of Manfred and Jennie DeRewal to transfer legal title to 34.672 acres of land located in Bedminster Township, Bucks County, Pennsylvania to R.E.D., Inc. in exchange for the issuance of all the authorized shares of the corporation to them in their capacity as Trustees of the Trust.
6. Mrs. DeRewal and some of the children live in a house located on the land transferred to R.E.D., Inc.
7. Following said Board of Directors meeting, the President and Secretary of the corporation caused all the authorized stock of R.E.D., Inc. to be issued to Manfred and Jennie DeRewal as Trustees for their children under Deed of Trust dated December 17, 1975.
8. By deed dated January 16, 1976, Manfred and Jennie DeRewal transferred the legal title to their property to R.E.D., Inc.
9. On January 29, 1976, the United States Tax Court, in Tax Court Docket No. 3839-75, entered a stipulated Decision against Manfred DeRewal and Jennie DeRewal for income tax for the year 1969 and additions to tax in the total amount of $121,482.79.
10. Following the above Decision, an assessment was made against Manfred and Jennie DeRewal on February 27, 1976 in the total amount of $121,482.79, plus statutory interest.
11. On February 27, 1976, a Notice and Demand for Payment was sent by the Internal Revenue Service to Manfred and Jennie DeRewal. To date, no payment has been received on said liability.
12. On December 10, 1976, the Internal Revenue Service made a Jeopardy Transferee Assessment against R.E.D., Inc., for the tax liability of Manfred and Jennie DeRewal for the 1969 tax year.
13. On January 13, 1977, the Internal Revenue Service issued a Notice of Liability to R.E.D., Inc. in the amount of the Jeopardy Transferee Assessment.
14. Within the ninety (90) day statutory period provided for in Internal Revenue Code § 6213(a), R.E.D., Inc. filed a Petition in the Tax Court of the United States, docketed as No. 3656-77.
15. On June 27, 1977, the Internal Revenue Service made a Jeopardy Transferee Assessment against Manfred and Jennie DeRewal in their capacity as Trustees under the Deed of Trust dated December 17, 1975 for the tax liability of Manfred and Jennie DeRewal for the 1969 tax year.
16. On June 27, 1977, Internal Revenue Service Officer William Crawford personally handed a notice of the Jeopardy Transferee Assessment made against Manfred and Jennie DeRawal in their capacities as Trustees under the Deed of Trust dated December ...