Taxation-Federal Income Tax-Divocrce Property Settlement as a Taxable Event

Respondent taxpayer transferred stock to his former wife pursuant to a voluntary property settlement agreement incorporated in their divorce decree. As consideration for the securities conveyed, his wife released her rights to alimony, dower, and intestate succession under Delaware law. The Commissioner of Internal Revenue assessed as taxable gain the difference between the taxpayer’s basis for the stock and its market value at the time of the transfer, but the Court of Claims ruled that the taxpayer realized no taxable gain from the transfer. On certiorari, held, reversed. The exchange was a taxable event in which the taxpayer received property equivalent in value to the market worth of the securities transferred. United States v. Davis, 370 U.S. 65 (1962).