Then as far as who pays the taxes on it, is a question that can't be answered in this public user-to-user forum. Somebody has to though. If it can't be worked out amicably between the parties involved, then you'll need to seek professional legal advice from a licensed professional that you can hold legally liable and culpable for the advice they provide you. As stated above, this is not the place to ask questions, when the answer (should you act upon that answer) could potentially put you in hot water with the IRS down the road.
