- 45 -
or other property, for the assumption of liabilities in
excess of basis, or for other consideration and is
intended to apply to any indebtedness which is dis-
charged. * * *
Id. at 1492.
Thus, Congress made clear that it intended section 1041(a)
to apply broadly to transactions between divorcing spouses.3
III. Q&A-9 Extends Section 1041 Broadly to Transfers on Behalf
of the Nontransferring Spouse Incident to Divorce
Section 1.1041-1T(c), Q&A-9, Temporary Income Tax Regs.,4
3 Sec. 1041 also applies broadly to transactions between
nondivorcing spouses, but that situation is not present in the
instant case.
4 Sec. 1.1041-1T(c), Q&A-9, Temporary Income Tax Regs., 49
Fed. Reg. 34453 (Aug. 31, 1984), provides:
Q-9. May transfers of property to third parties
on behalf of a spouse (or former spouse) qualify under
section 1041?
A-9. Yes. There are three situations in which a
transfer of property to a third party on behalf of a
spouse (or former spouse) will qualify under section
1041, provided all other requirements of the section
are satisfied. The first situation is where the
transfer to the third party is required by a divorce or
separation instrument. The second situation is where
the transfer to the third party is pursuant to the
written request of the other spouse (or former spouse).
The third situation is where the transferor receives
from the other spouse (or former spouse) a written
consent or ratification of the transfer to the third
party. * * * In the three situations described above,
the transfer of property will be treated as made
directly to the nontransferring spouse (or former
spouse) and the nontransferring spouse will be treated
as immediately transferring the property to the third
party. The deemed transfer from the nontransferring
spouse (or former spouse) to the third party is not a
(continued...)
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