- 89 -
There is nothing in the text of section 1041 that suggests section
1041 applies to cases such as this where one spouse transfers prop-
erty to a third party and receives payment in return.
The Commissioner issued temporary regulations under section 1041
pursuant to his general regulatory authority to “prescribe all
needful rules and regulations for the enforcement of this title”.
Sec. 7805(a). These temporary regulations consist solely of section
1.1041-1T, Temporary Income Tax Regs., 49 Fed. Reg. 34453 (Aug. 31,
1984) which, in turn, consists of 18 groups of a question and an
answer. In one of these groups, namely, Q&A-9, the Commissioner set
forth his position that section 1041 reaches certain “transfers of
property to third parties on behalf of a spouse”. Q&A-9 provides:
Q-9. May transfers of property to third parties on
behalf of a spouse (or former spouse) qualify under section
1041?
A-9. Yes. There are three situations in which a
transfer of property to a third party on behalf of a spouse
(or former spouse) will qualify under section 1041, pro-
vided all other requirements of the section are satisfied.
The first situation is where the transfer to the third
party is required by a divorce or separation instrument.
The second situation is where the transfer to the third
party is pursuant to the written request of the other
spouse (or former spouse). The third situation is where
the transferor receives from the other spouse (or former
spouse) a written consent or ratification of the transfer
to the third party. Such consent or ratification must
state that the parties intend the transfer to be treated as
a transfer to the nontransferring spouse (or former spouse)
subject to the rules of section 1041 and must be received
by the transferor prior to the date of filing of the trans-
feror's first return of tax for the taxable year in which
the transfer was made. 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 immedi-
Page: Previous 76 77 78 79 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 NextLast modified: May 25, 2011