Tax impacts in the division of assets incident to divorce
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Kevin and Elizabeth are negotiating a divorce settlement. Discuss the tax impacts to the division of assets and liabilities incident to divorce.
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Solution Summary
This 386 word solution explains the tax consequences of transfers incident to divorce including transactions that result in taxable events within a divorce.
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Since the problem is marked as Taxation, I assume that the response should discuss the tax impacts to the division of assets and liabilities incident to divorce.
Effective July 1, 1985, tax law changed to state that potentially taxable transactions incident to divorce are NOT taxable events. Examples will demonstrate the application of this law:
1. If the personal residence is transferred from one spouse to the other, the transfer is not a taxable event and the basis (cost) remains the same to the recipient as that of the transferor.
2. If the divorce ...
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