- 49 -
states:
Furthermore, in divorce cases, the government
often gets whipsawed. The transferor will not report
any gain on the transfer, while the recipient spouse,
when he or she sells, is entitled under the Davis rule
to compute his or her gain or loss by reference to a
basis equal to the fair market value of the property at
the time received.
* * * * * * *
Thus, uniform Federal income tax consequences will
apply to these transfers notwithstanding that the
property may be subject to differing state property
laws.
H. Rept. 98-432 (Part 2), supra at 1491-1492.
As quoted supra note 4, the penultimate sentence of Q&A-9
implements the antiwhipsaw rule of section 1041(b) by providing:
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.
Thus, under section 1041(b) and Q&A-9, the following is
deemed to occur if section 1041(a) applies to Ms. Read:
1. She is deemed to transfer her stock to Mr. Read.
2. Mr. Read is deemed to immediately transfer the stock to
MMP.
Pursuant to the divorce judgment, Mr. Read elected for MMP
to pay Ms. Read and to issue a promissory note to her. However,
despite these actual facts, because (in my view) section 1041(a)
applies here, section 1041(b) and Q&A-9 specifically require us
to analyze this transaction as if the stock were Mr. Read’s at
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