- 44 -
vorce” is broad, suggesting that Congress intended section
1041(a)(2) to apply broadly. See Arnes v. United States, 981
F.2d 456, 458, 460 (9th Cir. 1992) (Arnes I); Blatt v. Commis-
sioner, 102 T.C. 77, 79 (1994). That reading is corroborated by
the report of the Ways and Means Committee accompanying enactment
of section 1041 in 1984, which states in pertinent part:
The committee believes that, in general, it is
inappropriate to tax transfers between spouses. This
policy is already reflected in the Code rule that
exempts marital gifts from the gift tax, and reflects
the fact that a husband and wife are a single economic
unit.
The current rules governing transfers of property
between spouses or former spouses incident to divorce
have not worked well and have led to much controversy
and litigation. Often the rules have proved a trap for
the unwary as, for example, where the parties view
property acquired during marriage (even though held in
one spouse’s name) as jointly owned, only to find that
the equal division of the property upon divorce trig-
gers recognition of gain.
* * * * * * *
The committee believes that to correct these
problems, and make the tax laws as unintrusive as
possible with respect to relations between spouses, the
tax laws governing transfers between spouses and former
spouses should be changed.
H. Rept. 98-432 (Part 2), at 1491-1492 (1984).
The Ways and Means Committee also said in its report:
This nonrecognition rule applies whether the transfer
is for the relinquishment of marital rights, for cash
2(...continued)
(2) is related to the cessation of the
marriage.
Page: Previous 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 NextLast modified: May 25, 2011