113 T.C. No. 11
UNITED STATES TAX COURT
JOHN B. YOUNG AND MARTHA H. YOUNG, Petitioners v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
LOUISE F. YOUNG, f.k.a. LOUISE Y. AUSMAN, AND
JAMES R. AUSMAN, Petitioners v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket Nos. 20435-97, 21489-97. Filed August 20, 1999.
Ps, H and W, were divorced in 1988. Pursuant to
their 1989 property settlement, H transferred to W his
promissory note for $1,500,000. After H defaulted on
the note, a State court entered judgment in favor of W.
In 1992, as part of a settlement agreement relating to
the judgment, H transferred property to W in exchange
for the promissory note. The transfer satisfied the
principal, accrued interest, and legal and collection
expenses due pursuant to the terms of the promissory
note.
1. Held: Sec. 1041 applies to the 1992 transfer
of property, from H to W, that resolved a dispute that
arose from their property settlement.
2. Held, further, W's 1992 gross income includes
$308,906 relating to the value of property transferred
to her to discharge certain debts.
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