Claudia F. Walker - Page 19

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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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