After he was diagnosed with cancer, Albert Strangi underwent many surgeries by way of treatment. Despite his efforts he was told that he had very little life left and that there was no cure for his illnesses. Albert Strangi created a FLP (Family Limited Partnership) and on his deathbed contributed the bulk of his estate into the FLP.The judgeﾕs ruling did not challenge the validity of FLPs, but it tested the aspect of personal control. Albert Strangi did not arrange the FLP such that he limited his control, so many tax benefits the entity would have other wise provided were lost.

Hackl v. Commissioner of Internal Revenue

Mr. & Mrs. Hackle decided to start a tree farming business, so they created an LLC. Over the years they gifted portions of their business to their children and other family members, trusts, etc. The Hackls claim that their gifts valued less than the annual exclusion and thus were not reportable to the IRS. The judge ruled that because of issues of control, the gifts were actually future interests and did not qualify for the annual gift exclusion. The IRS and courts levied heavy tax penalties that ended up costing them hundreds of thousands of dollars.

Northern Tankers Ltd. v. Backstrom

Backstrom filed suit against a shipping company. He felt that the companyﾕs assets were not sufficient for his suit, so with a little research found that the owners of the company also owned several other entities and trusts. Because the shipping company commingled funds and lacked proper documentation and corporate formalities, the corporate veil was pierced.

Macura v. Northern Assurance Co Ltd

Macura was the sole owner of an entity that grew timber. The tree farm was destroyed by fire, so Macura placed a claim with his insurance company. The insurance company refused to support the claim, with the argument that the insurance policy was in the name of Macura and not in the name of the company.

Cook v. Commissioner of Internal Revenue

Mrs. Cook, 54,pleaded guilty in U.S. District Court to Obstruction of Justice. In her plea agreement Mrs. Cook, admitted that in July 2003, she created documents on her home computer, backdated to 1999, in an effort to evade taxes on some $9.4 million in income she and Mr. Cook received between 1998 and 2000. The false documents attempted to portray those funds as loans in an effort to avoid criminal charges.  Mrs. Cook was sentenced to 18 months in prison and Mr. Cook was sentenced to 88 months in prison.

United States v. Pisani

Pisani, a medical doctor, and sole stockholder in a corporation was held personally liable for Medicare repayment debts because the court ruled that the corporate veil should be pierced due to undercapitalization, lack of corporate formalities, lack of corporate records, lack of officers/directors, and ultimately an alter ego of the owner.

United States v. Jon-T Chemicals, Inc.

This case illustrates the alter-ego issue between parent and subsidiary entities.  The parent company was held personally liable for debts of the subsidiary, after the subsidiary entity's veil was pierced.  Alter-ego was determined because of common stock ownership, common organizational structure, common business departments, consolidated financial statements, undercapitalization, the parent paid salaries and other expenses of the subsidiary, commingling of funds, and the lack of corporate formalities in the subsidiary company.

Taeger v. Catholic Family and Community Services

The Taeger family sued CFCS for failing to provide them with all non-identifying information about their adopted daughter's biological mother.  The suit attempted to sue in correlation with CFCS, the Roman Catholic Church stating that the Church was an extension of CFCS, and thus an alter ego of CFCS.  The courts upheld that there was a clearly defined corporate veil around CFCS and that the Church should not be held liable for its actions..

Horizon Resources Bethany Ltd v Cutco Industries Inc.

Cutco is a successor entity to Cut & Curl, Inc who was a parent company of Cut & Curl of Bethany Square, Inc.  The case involved a lease between the plantiff and the subsidiary company.  The Parent was held liable for a lease between its subsidiary because of a personal guarantee, even thought the subsidiary changed the lease structure without informing the parent.