- 33 -
addresses and requires a transfer of property by a transferring
spouse to a third party on behalf of the nontransferring
spouse.22
The primary-and-unconditional-obligation standard does not
require analysis of (or even address) the transfer that Q&A-9
requires be analyzed in order to determine whether that temporary
regulation applies (provided that the other requirements of Q&A-9
and section 1041 are satisfied). The transfer that must be
analyzed under constructive-dividend decisional law in order to
determine whether the primary-and-unconditional-obligation
standard is satisfied and whether a stockholder whose stock is
not being redeemed received a constructive dividend is the
transfer by the redeeming corporation of the redemption proceeds
to the stockholder whose stock is being redeemed.23 In contrast,
22The inquiry under Q&A-9 as to whether a transfer of prop-
erty by the transferring spouse to a third party is made on
behalf of the nontransferring spouse is intended to determine
whether such a transfer, in substance, is (1) a transfer by the
transferring spouse of property to the nontransferring spouse and
(2) an immediate transfer of that property by the nontransferring
spouse to the third party.
23It has been suggested that the primary-and-unconditional-
obligation standard should be adopted as the only standard for
determining whether the on-behalf-of standard in Q&A-9 is satis-
fied in the case of a corporate redemption in a divorce setting
because the primary-and-unconditional-obligation standard has
served well in distinguishing between the form and substance of
corporate redemptions occurring in commercial settings. If that
suggestion is intended to mean that adoption of the primary-and-
unconditional-obligation standard by the courts has eliminated,
or substantially minimized, litigation over whether a stockholder
(continued...)
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