Federal Tax Research 10th Edition by Steven Gill, Gerald Whittenburg, Roby Sawyers, Debra Sanders, William Raabe

Exercise 38

Frances moved in with her mother, Beatrice, when Beatrice's health started to fail. Frances cared for her mother as a devoted child would and never expected anything in return. When Beatrice needed to move to a nursing home, she legally transferred the home to Frances for $1,000 and "other valuable consideration." The house had cost Beatrice $50,000 many years ago, and on the date of the transfer it was valued at $150,000. At the time of the transfer, Beatrice was insolvent, as she owed the IRS $250,000 in back taxes and interest for 1990 to 2008. A few months after the transfer of the house, the IRS filed a notice of federal tax lien for Beatrice's unpaid taxes. The IRS has filed against Frances for $150,000 of her mother's taxes, as Frances is in possession of the only valuable asset Beatrice has owned. Can the IRS collect from Frances