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obligation to purchase Ms. Read’s MMP stock, such that under
established principles of tax law (constructive-dividend deci-
sional law), see, e.g., Sullivan v. United States, 363 F.2d 724,
728-729 (8th Cir. 1966); Smith v. Commissioner, 70 T.C. 651, 668
(1978), Mr. Read received a constructive dividend (to the extent
of MMP's earnings and profits) as a result of MMP’s payment to
Ms. Read of the consideration stated in the divorce judgment in
redemption of her stock (primary-and-unconditional-obligation
standard).
We disagree with petitioners that Hayes v. Commissioner,
supra, Arnes v. Commissioner, supra, and Blatt v. Commissioner,
supra, require us to apply the primary-and-unconditional-obliga-
tion standard as to Mr. Read in order to determine whether the
on-behalf-of standard in Q&A-9 is satisfied in the instant cases.
As respondent correctly points out, this Court has not expressed
an opinion on whether the on-behalf-of standard in Q&A-9 is the
same as the primary-and-unconditional-obligation standard in
constructive-dividend decisional law. See Arnes v. Commissioner,
supra at 529 n.3, which this Court decided after it decided Hayes
v. Commissioner, supra, and Blatt v. Commissioner, supra. We
find petitioners’ reliance on those three cases to support their
view that in the instant cases the on-behalf-of standard in Q&A-9
is the same as the primary-and-unconditional-obligation standard
in constructive-dividend decisional law to be misplaced.
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