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section 1041(b) and the penultimate sentence of Q&A-9, we should
treat Mr. Read as having a right to receive any payment MMP makes
in redemption of what is deemed to be his stock, and thus he
constructively receives any payment MMP makes in redemption of
that stock to Ms. Read under general income tax principles. See
Lucas v. Earl, 281 U.S. 111 (1930).
VI. How Is Mr. Read Taxed?
Mr. Read and MMP indicated in their motion their belief that
the primary and unconditional standard applies to section 1041,
and that if section 1041 applies to Ms. Read’s redemption of her
MMP stock, respondent’s determinations in the notices of defi-
ciency issued to Mr. Read and MMP should be sustained. I concur
with that result but for different reasons. Under the analysis
of section 1041 and Q&A-9 herein, Mr. Read would be taxed on the
constructive dividend he received on the transfer of Ms. Read’s
stock to MMP, not as a result of his litigating position in this
case. Since Mr. Read constructively received MMP’s payment to
Ms. Read, he is taxable on it as a dividend under sections
302(d), 301(a), and 316.8
VII. Primary and Unconditional Standard
A payment to a shareholder in redemption of stock is a
constructive dividend to the remaining stockholder if the non-
8 MMP had earnings and profits well in excess of the
redemption payments during the years in issue.
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