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Petitioner argues that section 1.1041-1T(c), Q&A-9,
Temporary Income Tax Regs., 49 Fed. Reg. 34453 (Aug. 31, 1984),
qualifies her for nonrecognition-of-gain treatment under section
1041(a) for the sale of the 25-percent interest in the Happy
Valley property received from Mr. Walker in September 1997.
Section 1.1041-1T(c), Q&A-9, Temporary Income Tax Regs., 49 Fed.
Reg. 34453 (Aug. 31, 1984), applies only to transfers made by a
taxpayer to a third party on behalf of that taxpayer’s spouse or
former spouse. Generally, a transfer by a taxpayer is considered
to have been made “on behalf of” that taxpayer’s spouse or former
spouse if it satisfied a specific legal obligation or liability
of that taxpayer’s spouse or former spouse. Ingham v. United
States, 167 F.3d 1240, 1243-1245 (9th Cir. 1999); Arnes v. United
States, 981 F.2d 456, 459 (9th Cir. 1992); Blatt v. Commissioner,
102 T.C. 77, 81 (1994). As discussed above, Mr. Walker’s
transfer of his 25-percent interest in the Happy Valley property
on September 26, 1997, satisfied a specific legal obligation that
he owed to petitioner (i.e., a portion of the equalizing money
judgment) and gave her control over an undivided 50-percent
interest in that property. Petitioner’s subsequent sale of her
interest in the Happy Valley property did not satisfy any other
legal obligation or liability that Mr. Walker owed to her or
anyone else. Thus, petitioner did not make the sale “in the
interest of” or “as a representative of” Mr. Walker. Cf. Craven
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