Carol M. Read, et al. - Page 93




                                       - 93 -                                         
        the transfer by petitioner [Ms. Blatt] of her shares to corporation           
        was on behalf of [Mr.] Blatt.”  Blatt v. Commissioner, 102 T.C. at            
        83.  But for the Court of Appeals for the Ninth Circuit, we are               
        unaware of any Court of Appeals that has addressed the issue of               
        whether a corporate redemption qualifies under Q&A-9.                         
             We conclude with a final concern about the analysis set forth in         
        the majority Opinion.  Congress enacted section 1041, in part, to             
        remedy the “whipsaw” that occurred when one spouse failed to report           
        his or her gain on the transfer of appreciated property to the other          
        spouse; the Government was whipsawed because the transferee’s basis           
        in the transferred property equaled its fair market value, and the            
        transferor, to the extent that the section 6501 period of limitations         
        had closed, never paid any Federal income tax on the appreciated              
        value underlying that increased basis.  See id. at 79.  Although the          
        majority avoids this “whipsaw” in the instant case by concluding that         
        Mr. Read conceded he was liable for Federal income tax on the redemp-         
        tion, we do not agree that Mr. Read’s position in this case was a             
        concession of liability or should be treated as one.  Mr. Read’s              
        position was based on a legal analysis that the majority rejects.             
        Mr. Read should not be held to that position after the legal princi-          
        ples on which his position was based are turned aside by the major-           
        ity, particularly since the tax result to Mr. Read may change as a            
        result of their analysis.                                                     
             But for his “concession”, the majority would have had to analyze         
        the tax effect of the redemption on Mr. Read.  Q&A-9 states that the          




Page:  Previous  76  77  78  79  80  81  82  83  84  85  86  87  88  89  90  91  92  93  94  95  Next

Last modified: May 25, 2011