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COLVIN, J. concurring: I agree with the majority that
section 1041 applies to the redemption of Ms. Read’s stock and
with its analysis supporting that result. I also concur in the
result as to Mr. Read for reasons stated herein.
I. Thesis: Section 1041 and Q&A-9 Apply Broadly and
Prevent Nonsymmetrical Treatment of Spouses
The issue of whether, or how, section 1041 applies to
redemptions incident to a divorce has been difficult for private
parties, the Government, and the courts.1 Despite this past
difficulty, this concurring opinion argues that section 1041 can
provide predictable and fair results, with minimal risk of
nonsymmetrical treatment of spouses, based on two principles.
The first principle is (a) that Congress intended section 1041 to
provide a broad rule of nonrecognition for transfers of property
between spouses and former spouses incident to divorce, and
(b) that section 1.1041-1T(c), Q&A-9, Temporary Income Tax Regs.
(Q&A-9), 49 Fed. Reg. 34453 (Aug. 3, 1984), fully implements that
intent for economically equivalent transactions involving third
parties, including redemptions of stock held by one spouse. The
second principle is that, if applied according to their terms,
section 1041(b) and corresponding language in the penultimate
sentence of Q&A-9 fully achieve the congressional purpose of
1 Compare, e.g., Arnes v. United States, 981 F.2d 456 (9th
Cir. 1992) (Arnes I), with Arnes v. Commissioner, 102 T.C. 522
(1994) (Arnes II).
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