SECTION 1041: TRANSFERS BETWEEN SPOUSES
01.Core Concepts
• All transfers between spouses and incident to a divorce result in: • Carryover basis to transferee • Carryover holding period to transferee Example: Ross and Rachel are getting divorced. As part of the divorce settlement, Rachel receives a vacation home worth $800,000 that the couple paid $300,000 for many years earlier. Rachel is the transferee and her basis in the home is $300,000. If she sells the property, she will recognize gain to the extent any sale proceeds from the home exceed this amount.