ERIEM SURGICAL, INC., Plaintiff-Appellant, v. UNITED STATES of America and John Koskinen, Commissioner of Internal Revenue, Defendants-Appellees, 843 F.3d 1160

EASTERBROOK, Circuit Judge. Micrins Surgical, Inc., went out of business on March 13, 2009, without paying all of its taxes. Eriem Surgical, Inc., was incorporated the same day, purchased Mic-rins’ inventory, took over its office space, hired its employees, used its website and phone number, and pursued the same line of business: the sale of surgical instruments. Bernhard Teitz, the president and 40% owner of Micrins, continued to play a leading role in Eriem, though its sole stockholder is Carol Teitz, Bernhard’s wife.

Eriem uses “Micrins” as a.trademark. (Bernhard asserts that he owns this mark and licensed it to Eriem.) The Internal Revenue Service treated Eriem as a continuation of Micrins and collected almost $400,000 of Micrins’ taxes from Er-iem’s bank accounts and receivables.. Er-iem responded with this wrongful levy suit under 26 U.S.C. § 7426(a)(1). After a bench trial, the district judge concluded that Eriem is indeed a continuation of Micrins and that the levy therefore is valid.

The Supreme Court has never decided ’whether state or federal law governs corporate successorship when the dispute concerns debts to the national government. One might infer from United States v. Kimbell Foods, Inc., 440 U.S. 715, 99 S.Ct. 1448, 59 L.Ed.2d 711 (1979), that federal law controls but generally absorbs state law, unless it is hostile to national interests. But, a generation after Kimbell Foods, the Supreme Court noted a conflict among the circuits on the subject and postponed its resolution, in an opinion that did not cite Kimbell Foods. See United States v.

Bestfoods, 524 U.S. 51, 63 n.9, 118 S.Ct. 1876, 141 L.Ed.2d 43 (1998). The next year the Court held in Drye v. United States, 528 U.S. 49, 120 S.Ct. 474, 145 L.Ed.2d 466 (1999), that in tax cases state law determines the taxpayer’s rights in property that the IRS seeks to reach, while federal law determines which of those rights the IRS can collect on.

Neither Eriem nor the IRS contends that the Internal Revenue Code says anything about corporate successorship, so it seems best to apply state law. (Eriem has not contended that it would fare better under federal law — if there is any on this subject.) The district court concluded that Bernhard has been running Eriem, which is conducting the same business as Micrins notwithstanding Carol’s ostensible ownership and the change of focus from instruments used in health care to instruments used by cosmetic surgeons..

Eriem insists that Carol is the real as well as the ostensible owner, that the switch to instruments for cosmetic surgery marks a substantial change' of business, and that it is irrelevant that Eriem bought all of Micrins’ assets, hired its workers, occupies the same premises, and uses the Micrins trademark, website, phone number, and email address. But under Illinois law, which uses a multi-factor balancing standard to determine successorship, see Steel Co. v. Morgan Marshall Industries, Inc., 278 Ill.App.3d 241, 214 Ill.Dec. 1029, 662 N.E.2d 595 (1996), these contentions are matters for the trier of fact.

The district court’s conclusion that Eriem is still conducting the Micrins business is not clearly erroneous. That successorship is the “ultimate issue” does not make it less a finding of fact. See, e.g., Pullman-Standard v. Swint, 456 U.S. 273, 102 S.Ct. 1781, 72 L.Ed.2d 66 (1982); Icicle Seafoods, Inc. v. Worthington, 475 U.S. 709, 106 S.Ct. 1527, 89 L.Ed.2d 739 (1986). According to Eriem, the district judge made a legal error by failing to give dis-positive significance to the change of ownership.

Bernhard owned only 40% of Micrins’ stock; he claims to own none of Eriem’s, but even if all of his wife’s shares are imputed to him the difference between 40% ownership of Micrins and 100% of Eriem means that they just cannot be the same business. Eriem contends that under Vernon v. Schuster, 179 Ill.2d 338, 228 Ill.Dec. 195, 688 N.E.2d 1172 (1997), any change in ownership prevents treating one firm as another’s successor. But that’s not what Vernon said and is not how it has been understood.

There was a substantial change of ownership in Steel Co., in addition to the fact that a former stockholder was replaced by his spouse as stockholder of the new firm, and the court held that this did not prevent treating the new firm as the old one’s successor when all other considerations pointed that way. We read Vernon (as did Steel Co.) as holding that a complete change of ownership prevents a finding of successorship, not that complete identity of ownership is essential to successorship.

The district court’s conclusion that Carol Teitz serves as a proxy for her husband means that there has not been a complete change of ownership; this, too, was a conclusion of Steel Co. We could imagine an argument that, because Bernhard owned only 40% of Mic-rins’ stock, Eriem should be liable for only 40% of its taxes. But Eriem has taken an all-or-none stance; it is unwilling to concede owing the Treasury a penny. Given a choice between all and none, the district court did not commit either a legal or a factual error in electing “all.” Affirmed