Alexandra S. Yankwich, f.k.a. Alexandra Y. Capps - Page 6




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          separation instrument as including a decree of divorce or a                 
          written separation agreement.                                               
               There is no question but that the Separation Agreement is              
          incident to the divorce between petitioner and Dr. Capps.  We               
          note that the Separation Agreement was referred to in their                 
          divorce decree.  The Separation Agreement qualifies as a                    
          separation agreement within the meaning of section 71(b)(2).  The           
          transfer of each payment was related to the cessation of the                
          marriage between petitioner and Dr. Capps, occurred less than 6             
          years after the cessation of that marriage, and was made to                 
          effect the division of marital property between petitioner and              
          Dr. Capps.  Therefore, section 1041(a) applies to part or all of            
          each $1,750 monthly payment from Dr. Capps to petitioner.                   
               Section 453B(a) provides that if an installment obligation             
          is satisfied for less than face value, distributed, transmitted,            
          sold, or otherwise disposed of, gain or loss shall result.                  
          Section 453B(a) does not apply to transfers of installment                  
          obligations between spouses incident to a divorce as described in           
          section 1041(a).  Sec. 453B(g)(1).  In that case, the same tax              
          treatment with respect to the transferred installment obligation            
          applies to the transferee as would have applied to the                      
          transferor.  Sec. 453B(g)(2).  Respondent argues that petitioner            
          became a transferee with respect to the portion of the Note                 
          represented by the $1,750 monthly payments and that she should be           






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