In 1992, Rosalina and Coriolano Verduchi owed $82,000 to the Internal Revenue Service for unpaid income taxes as determined by the U.S. Tax Court. While this tax debt was unpaid, they transferred title to their home to their son, Dennis. A year later, the unpaid taxes had grown to almost $400,000 because of interest. In 1994, the IRS filed its notice of tax lien. Purchase Bob Bruss reports online. In 1996, Rosalina and Coriolano filed Chapter 7 bankruptcy and discharged their debts. However, because the fraudulent transfer of the house, which would have been available to pay the $400,000 tax lien, was invalid under state law, the IRS argued the transfer of the house to Dennis was fraudulent so the tax lien should apply to the house. Meanwhile, Dennis obtained a $196,000 mortgage on the house from Option One Mortgage Corp. The IRS then sought (1) to foreclose its tax lien against Dennis' house, plus (2) $196,000 from Dennis for the cash he obtained from the house when he obtained the O...
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