Carol M. Read, et al. - Page 24




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          (9th Cir. 1992), that the obligation to purchase Ms. Arnes’ stock           
          was Mr. Arnes’ obligation, and not the obligation of Moriah,                
          controlled our decision in Arnes v. Commissioner, 102 T.C. 522              
          (1994).  The Commissioner did not ask us in Arnes v. Commis-                
          sioner, supra, to determine whether the on-behalf-of standard in            
          Q&A-9 was met as a result of the transfer by Ms. Arnes, who was             
          not a party before us in that case, of her Moriah stock to that             
          company.  With respect to the Commissioner’s reliance on Golsen,            
          we held in Arnes v. Commissioner, supra at 529:                             
                    Golsen v. Commissioner, supra, does not apply                     
               because Arnes v. United States, supra, does not address                
               the legal issue here:  whether there is a constructive                 
               dividend to petitioner [Mr. Arnes].  That case con-                    
               cerned the tax consequences to Joann [Ms. Arnes] under                 
               section 1041. * * * We note that petitioner was not a                  
               party in Arnes [v. United States, supra], and Joann had                
               a possibly3 adverse position to petitioner in that                     
               case.[12]                                                              
          On the facts presented, we found that Mr. Arnes did not have a              
          primary and unconditional obligation13 to buy Ms. Arnes’ Moriah             

               12We stated in footnote 3 referred to in the foregoing                 
          excerpt from Arnes v. Commissioner, 102 T.C. 522, 529 n.3 (1994):           
                    This majority opinion does not express an opinion                 
               as to whether the standard of “on behalf of” the spouse                
               in sec. 1.1041-1T(c), Q&A-9, Temporary Income Tax Regs.                
               * * * is the same as the primary and unconditional                     
               obligation rule applicable to a constructive dividend.                 
               Suffice it to say that our conclusion in this case                     
               [Arnes v. Commissioner, supra] is consistent with our                  
               conclusion in Blatt v. Commissioner, 102 T.C. 77                       
               (1994), also a Court-reviewed opinion.                                 
               13Unlike the divorce judgment involved in the instant cases,           
                                                             (continued...)           





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