In Ames v. United States the Ninth Circuit held that Temporary Treasury Regulation § 1.1041-IT, A-9 extended nonrecognition treatment to an ex-wife whose 50 percent interest in a corporation was redeemed pursuant to a divorce settlement, thereby leaving her ex-husband as the sole owner of the corporation. In doing so, the court not only contradicted the precedential treatment of bootstrap stock acquisitions but also misapplied its own interpretation of this regulation. This Note argues that a transaction such as that in Ames falls outside of the scope of the regulation and, therefore, the precedent surrounding bootstrap acquisitions should have controlled
