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decree, we concluded that the divorce decree substantively
transferred ownership of 55 percent of the stock to the wife.
Therefore, we decided that the husband was liable for the tax on
only 45 percent of the proceeds of the sale of the stock.
Friscone reflects the proposition that, when a divorce
decree controls the apportionment of property between a husband
and wife, each of them is liable only for the tax on the gain
resulting from the sale of their portion of that property to a
third party. Petitioner’s and Mr. Walker’s divorce decree set
forth that they would receive separate 25-percent interests in
the Happy Valley property. As discussed above, petitioner
accepted Mr. Walker’s 25-percent interest in the Happy Valley
property in consideration for a credit against the $500,000
equalizing money judgment. Mr. Walker then transferred his
25-percent interest in the Happy Valley property to petitioner
pursuant to a quitclaim deed. This transfer extinguished his
ownership interest in the Happy Valley property. Consequently,
the divorce decree no longer controlled the apportionment of the
Happy Valley property between petitioner and Mr. Walker as of the
date of its sale to Parker Development. Therefore, the reasoning
of Friscone is of no help to petitioner in this case.
Because petitioner controlled an undivided 50-percent
interest in the Happy Valley property at the time of its sale,
she had the right to receive the income generated by the sale of
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