Property and Taxation

Question 1

How many years of tax returns should be reviewed

Answer 1

IDFA recommends the review of five years worth of returns

Question 2

What is the cost basis of property transferred incident to divorce

Answer 2

THere is no step-up in basis when assets are transferred incident to divorce.

Question 3

How is an annuity transferred incident to divorce taxed?

Answer 3

The basis in the annuity is transferred and only gains or dividends are taxable.

Question 4

What is the IRS Code that permits spouses or former spouses to transfer property tax-free?

Answer 4

Section 1041

Question 5

What are exceptions to IRS 1041 non-recognition rules

Answer 5

1. Spouse is a nonresident alien or the transfer of services

Question 6

What is unique about the transfer of US Saving Bonds pursuant to divorce?

Answer 6

The transferor must include the accrued interest on their tax return when they are reissued.

Question 7

What are the provisions of a 1041 transfer

Answer 7

1. Occurs one year after the divorce
2. The transfer is pursuant to the divorce decree and occurs not more than six years after the divorce

Question 8

Losses on personal property

Answer 8

Losses from the sale of personal-use property, such as your home or car aren’t tax deductible.