Domestic Diversions

Incident to divorce

When one person transfers property to another, a taxable event may have occurred. There may be a taxable gain or loss or additional income. This is not true for most transfers incident to divorce. (IRC 1041)

Property transfers between spouses in connection with a divorce creates no gain or loss and no additional income. The tax basis that the transfering spouse had immediately prior to the transfer becomes the receiving spouse’s basis. The transfer is deemed incident to divorce when it occurs within one year of the divorce and is related to the divorce.

Talk to your accountant for more and updated information and specific advice about your situation.

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