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27 Mo. L. Rev. 354 (1962)
Puzzling Problems in Property Settlements-The Tax Anatomy of Divorce

handle is hein.journals/molr27 and id is 368 raw text is: PUZZLING PROBLEMS IN PROPERTY SETTLEMENTS- THE TAX ANATOMY OF DIVORCE Wm. DOUGLAS KILBOUax, JR.e I. THE PROBLEMS A. Divorce Settlements A husband, in order to rid himself of a nagging wife, agrees to transfer to her 1,000 shares of stock worth 101,000 dollars, for which he originally paid 1,000 dollars. A month later, the couple are divorced, and immediately thereafter the ex-husband transfers the stock pursuant to the agreement.1 How should this transaction be treated for federal gift tax and income tax purposes? It seems obvious in any normal sense that H has not made a gift. The transaction should not be subject to the gift tax. Whether it is free from gift tax will be discussed hereafter. What about the federal income tax? It also seems obvious that H has secured the benefit of the increment in value of 100,000 dollars by using it to acquire his freedom and that this disposition of property results in a realization of 100,000 dollars of income which should be subject to the fed- eral income tax. Whether this disposition does result in a realization of in- come, and whether the realized income, if any, is recognized and can be cal- culated for federal income tax purposes, will also be discussed hereafter. Does the receipt by the ex-wife of 101,000 dollars worth of stock result in income to her? In determining whether W realized income when she received the stock, is it relevant that she was twenty-three years old when she married H, that he was eighty at the time, that she was an extremely attractive 100-dollar-a-night call girl prior to the marriage, that the marriage lasted about two months, and that W boasts to all her young and relatively poor new clients that she married the old goat for his money? Is it relevant *Professor of Law and Director, Graduate Tax Program, School of Law, Boston University; member of the bar, Massachusetts and Oregon; B.A., Yale University, 1949; LL.B., Columbia University, 1953. 1. The ex-wife and ex-husband will sometimes hereafter be referred to, re- spectively, as W and H. (354)

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