Don’t Dilly Dally On Division

Okay, say the decree is signed, the ink is dry and the next step is to actually divide the property. Don’t dilly dally.

According to the Internal Revenue Code, you don’t recognize a gain or loss on a transfer between spouses or to a former spouse incident to divorce. But you need to know the definition of “incident to divorce”.

A property transfer is “incident to divorce” if it….

1. Occurs within one year after the divorce or
2. It is made pursuant to a divorce or separation agreement and occurs within six years after the date the marriage ends.

Thus, get the property transfers into the decree and get them done within less than six years.