Discussion:Divorce settlment payments
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Discussion Forum Index --> Advanced Tax Questions --> Divorce settlment payments
Discussion Forum Index --> Tax Questions --> Divorce settlment payments
| 9 November 2007 | |
| I have a client who is making divorce settlement payments to his ex for investment property which they jointly own. Does the payments to his ex increase his basis in the property? | |
Death&Taxes (talk|edits) said: | 9 November 2007 |
| No, see Sec. 1041-transfers between spouses incident to divorce are tax free. the question of any interest paid on the acquisition is another topic! | |
| 9 November 2007 | |
| So if the ex spouse had basis, her basis would then transfer to him, thus increasing his overall basis, right? | |
| 9 November 2007 | |
| For example:
If they had an investment property jointly while married costing 100k, then upon divorce he pays her 500k for her 1/2 interest then he would then have a basis of 100k or 550k (1/2 of 100k plus the 500k) | |
Death&Taxes (talk|edits) said: | 9 November 2007 |
| You've got it....this has been so since 1983 or 1984, I believe. | |
| 10 November 2007 | |
| Swonder, not sure what you mean about "basis of 100k or 550k." I believe (but not totally certain) that regardless of what ex-husband pays ex-wife for her share of the investment property, his basis will be the carryover basis of $100,000. See IRC 1041 and related Treasury Regs. | |
Death&Taxes (talk|edits) said: | 10 November 2007 |
| Forgive me, I did not read your comment past where you had it correctly. Your basis is 100K, before the agreement your client's basis was 50K and his ex-wife was 50K....now he adds her basis to his. | |
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