- 30 -
would have expressly so stated. We did not.18
We have rejected petitioners’ reliance on Hayes v. Commis-
sioner, 101 T.C. 593 (1993), Arnes v. Commissioner, 102 T.C. 522
(1994), and Blatt v. Commissioner, supra, 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. We shall now decide
whether Ms. Read’s February 5, 1986 transfer of MMP stock will
satisfy the on-behalf-of standard in Q&A-9 only if, as petition-
ers argue, the primary-and-unconditional-obligation standard is
satisfied as to Mr. Read. We hold that the primary-and-
unconditional-obligation standard is not an appropriate standard
18Nor did we conclude in Blatt v. Commissioner, supra, as
has been suggested, that Q&A-9 may never apply to a corporate
redemption in a divorce setting. To the contrary, as discussed
above, we concluded in Blatt that Ms. Blatt could have estab-
lished that she made a transfer of property to a third party on
behalf of Mr. Blatt within the meaning of Q&A-9 if she had shown
that at the time she transferred to Phyllograph her stock in that
company (1) she was acting in the interest of Mr. Blatt, (2) she
was acting as his representative, or (3) the transfer of her
Phyllograph stock to that corporation satisfied an obligation or
a liability of Mr. Blatt. See id. at 82 & n.12. If we had
concluded in Blatt that, as a matter of law, Q&A-9 and sec. 1041
may never apply to a corporate redemption in a divorce setting,
we would have expressly so stated. We did not.
The Court of Appeals for the Ninth Circuit in Arnes v.
United States, 981 F.2d 456 (9th Cir. 1992), held that Q&A-9 and
sec. 1041 applied in the case of a corporate redemption in a
divorce setting. Although in Blatt we expressed our disagreement
with the holding in Arnes v. United States, supra, our disagree-
ment with that holding was not based upon our conclusion that, as
a matter of law, Q&A-9 and sec. 1041 may never apply in the case
of a corporate redemption in a divorce setting. See Blatt v.
Commissioner, supra.
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