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Sale of Property due to divorce

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    #1

    Sale of Property due to divorce

    Person sells property for a $20,000 gain. All of the gain is paid to the person's former spouse as stated in the divorce decree.

    Can the $20,000 payment to former spouse be used to increase the person's basis so that no gain is recognized?

    TIA
    Tags: None
    #2
    Nope..

    cashing in a property to satisfy a divorce obligation is taxable. Better would have been to give to former spouse and let them cash in and pay tax. But that is not always practical for many reasons.

    Worse yet, how about cashing in IRA, paying tax and early distribution before paying spouse.

    Doug

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      #3
      Sounds like your clients ex wife had a sharp attorney who was aware of the tax implications of property transferred and received incident to a divorce. Your client should have received tax representation prior to the drafting of the divorce agreement.

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        #4
        Divorce Agreement-sale of house

        Did the man or wife live in the house prior to divorce and be qualified for the Sect. 121
        exclusion? Just thinking out loud.

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