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extends section 1041(a) to transfers of property by a spouse
(transferring spouse) to a third party on behalf of a former
spouse (nontransferring spouse). To qualify, the transfer must
be “on behalf of” the transferring spouse. The temporary regula-
tions do not define or limit the term “on behalf of”.
Q&A-9, as applied to divorcing spouses, properly implements
section 1041(a) because it recognizes that section 1041 applies
not only to transfers to the other spouse, but also to transfers
to a third party “on behalf of” that other spouse. Like section
1041(a), this facilitates the division of a marital estate
incident to divorce without taxation to the spouse who is with-
drawing assets from the marital estate. There is no suggestion
in the regulations that the “on behalf of” language has any
purpose other than to make Q&A-9 apply as broadly as section
1041(a) does; i.e., to transactions made to divide a marital
estate.
The language of section 1041(a), its legislative history,
and the language of Q&A-9, clearly support the view of the
majority that the “on behalf of” standard in Q&A-9 is satisfied
if the transfer was “in the interest of” or was made by the
transferring spouse acting “as a representative of” the
nontransferring spouse. Majority op. pp. 36-38.
4(...continued)
transaction that qualifies for nonrecognition of gain
under section 1041.
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