- 62 -
Respondent’s position is that Mr. Read had a primary and
unconditional obligation to purchase Ms. Read’s stock and that
the redemption of Ms. Read’s stock (a necessary and integral part
of which was her transfer of stock to MMP) satisfied Mr. Read’s
obligation. Mr. Read, MMP, and Ms. Read agree that the primary
and unconditional obligation standard should be determinative of
whether Ms. Read’s transfer of stock was “on behalf of” Mr. Read
within the meaning of Q&A-9. On this point, the parties are all
correct.6 The primary and unconditional standard is still con-
trolling law for determining whether a divorce-related redemption
distribution to one shareholder spouse can ever be a dividend to
the remaining shareholder spouse. See Arnes II, supra. Because
symmetrical treatment is required by section 1041, it should be
obvious that the same primary and unconditional standard must
also be the standard for determining whether Q&A-9 applies to a
5(...continued)
purpose served by the corporate distribution to redeem stock
rather than the spouse’s transfer of stock to the corporation.
However, a redemption distribution to a spouse that satisfies a
primary and unconditional obligation of the other spouse is
completely dependent on the transfer of stock to the redeeming
corporation. If a redemption distribution that satisfies a
primary and unconditional obligation of the nontransferring
spouse is totally dependent on the transfer of stock being
redeemed, then the transfer of stock to the redeeming corporation
is an integral part of satisfying the primary and unconditional
obligation of the nontransferring spouse.
6Ms. Read and respondent argue that the redemption satisfied
Mr. Read’s primary and unconditional obligation, while Mr. Read
and MMP argue that Mr. Read was never primarily and
unconditionally obligated to purchase Ms. Read’s stock.
Page: Previous 52 53 54 55 56 57 58 59 60 61 62 63 64 65 66 67 68 69 70 71 NextLast modified: May 25, 2011