See United States v. McCombs, 30 F.3d 310, 330 (2d Cir. 1994) (holding that while whether a taxpayer conveyed a property to her daughters for adequate consideration under New York law was helpful, it was not dispositive of whether the daughters were federally-protected “purchasers” under § 6323(a)); see also United States v. Sabby, 2014 WL 988459, at *3 (D. Minn. Mar. 13, 2014) (“The consideration requirement is determined by federal law.”).
Among the factors considered by courts are: (1) adequacy of consideration paid by the title holders; (2) whether conveyance was executed in anticipation of legal liability; (3) whether the taxpayer exercises control or retains possession after the transfer; (4) existence of familial or other close relationship between taxpayer and alleged nominee; (5) whether taxpayers enjoys benefits or profits from the property after transfer; (6) whether expenses and maintenance costs of property is paid by the taxpayer after transfer. Spotts v. United States , 429 F.3d 248, 253 n.2 (6th Cir. 2005) ; Fourth Inv. LP v. United States , 720 F.3d 1058, 1070 (9th Cir. 2013) ; United States v. Sabby , 2014 WL 988459, at *5 (D. Minn. Mar. 13, 2014). It is clear from the caselaw that "no single factor is dispositive" and "[v]irtually without exception, courts focus on the totality of the circumstances."
The Government relies primarily on three out-of-circuit cases for the proposition that performance of a pre-existing legal duty is not consideration under 26 U.S.C. § 6323. See United States v. Pavenick, 197 F. Supp. 257, 258 (D.N.J. 1961); United States v. Phillips, 715 F. Supp. 81, 84 (S.D.N.Y 1989); United States v. Sabby, 2014 WL 988459, at *3-4 (D. Minn. Mar. 13, 2014). This Court, however, declines to follow their lead as those decisions focus on the consideration proffered by the assignor of a security interest as opposed to the assignee.
"A nominee is one who holds bare title to property for the benefit of another." United States v. Sabby, No. 12-cv-1799 (PAM/FLN), 2014 WL 988459, at *5 (D. Minn. Mar. 13, 2014) (citing Scoville v. United States, 250 F.3d 1198, 1202 (8th Cir. 2001)). In determining nominee status, Minnesota Courts consider the following factors