Washington Law Review


Richard E. Fogg


The Ninth Circuit and the Tax Court have disagreed on the circumstances in which nonrecognition of gain under § 1041 of the Internal Revenue Code may extend to a spouse who redeems stock at divorce. This conflict is representative of a larger problem surrounding the question of which spouse to tax on the redemption of stock incident to divorce. This Comment examines the tension between the policy underlying § 1041 and the temporary regulations, and identifies the tension as the cause of inconsistent judicial decisions. This Comment also proposes an amendment to the Code that provides both certainty to the divorcing spouses and ensures that gain is recognized by one spouse.

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