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RUWE, J., dissenting: I disagree with the standards that
the majority opinion uses for determining whether Ms. Read’s
transfer of stock to MMP qualifies as a transfer to which section
1041 applies.
When considering whether section 1041 can be applied to a
transfer to a third party, it is necessary to examine the tax
consequences for both spouses. This is because symmetrical
treatment of both spouses is necessary to achieve the purposes of
section 1041. The transaction in issue in this case is Ms.
Read’s transfer of stock to MMP. This transaction was a corpo-
rate redemption that left Mr. Read in control of MMP. A substan-
tial body of case law has developed regarding the tax results of
such redemptions.
Long before the enactment of section 1041, courts were
required to deal with the tax ramifications of a corporate
redemption of one shareholder’s stock that left a remaining
shareholder in control of the redeeming corporation. From one
perspective, such a redemption conferred a control benefit on the
remaining shareholder. Based on this, the Commissioner argued
that the corporation’s redemption payment constituted a construc-
tive dividend to the remaining shareholder. On the other hand,
the postredemption value of the corporation was diminished by the
distribution of corporate funds used in the redemption, suggest-
ing that the remaining shareholder may have received no real
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