What is Transfers between spouses?
In short
No gain or loss is recognized on transfers of property between spouses, or between former spouses when incident to a divorce. The recipient takes the transferor's basis.
Key takeaways
- A transfer is incident to divorce if it occurs within 1 year after the marriage ends, or is related to its ending.
- The carryover basis applies even if the property's value is below basis.
- The rule doesn't apply if the recipient spouse is a nonresident alien.
Where it's tested
REG: Property Transactions: Gains, Losses & Like-Kind Exchanges — study notes, a five-minute revision sheet and practice questions.
Practise: 3 questions
Question 1 of 3 · 0 answered
A business sells equipment for $55,000. Original cost was $50,000 and accumulated depreciation was $30,000. How is the gain characterized?