Carol M. Read, et al. - Page 46




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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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