- 19 -
The temporary regulations under section 1041 also describe
the circumstances in which a transfer of property by a spouse to
a third party on behalf of a spouse or former spouse qualifies as
a transfer to which section 1041 applies. See sec. 1.1041-1T(c),
Q&A-9, Temporary Income Tax Regs. (Q&A-9), 49 Fed. Reg. 34453
(Aug. 31, 1984). Q&A-9 provides in pertinent part:
Q-9. May transfers of property to third parties
on behalf of a spouse (or former spouse) qualify under
section 1041?
A-9. Yes. There are three situations in which a
transfer of property to a third party on behalf of a
spouse (or former spouse) will qualify under section
1041, provided all other requirements of the section
are satisfied. The first situation is where the trans-
fer to the third party is required by a divorce or
separation instrument. The second situation is where
the transfer to the third party is pursuant to the
written request of the other spouse (or former spouse).
The third situation is where the transferor receives
from the other spouse (or former spouse) a written
consent or ratification of the transfer to the third
party. * * * In the three situations described above,
the transfer of property will be treated as made di-
rectly to the nontransferring spouse (or former spouse)
and the nontransferring spouse will be treated as
immediately transferring the property to the third
party. The deemed transfer from the nontransferring
spouse (or former spouse) to the third party is not a
transaction that qualifies for nonrecognition of gain
under section 1041.
Ms. Read contends that her transfer of MMP stock to MMP was
a transfer of property by her to a third party on behalf of Mr.
Read within the meaning of Q&A-9 and that that transfer fits
within both the first situation and the second situation de-
scribed in that temporary regulation. Consequently, according to
Page: Previous 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 NextLast modified: May 25, 2011