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Nell and Kirby are in the process of negotiating their divorce agreement, to be finalized in 2019
Nell and Kirby are in the process of negotiating their divorce agreement, to be finalized in 2019. What should be the tax consequences to Nell and Kirby if the following, considered individually, became part of the agreement?
a. In consideration for her one-half interest in their personal residence, Kirby will transfer to Nell stock with a value of $200,000 and $50,000 of cash. Kirby's cost of the stock was $150,000, and the value of the personal residence is $500,000. They purchased the residence three years ago for $300,000.
Expert Solution
If the stock and house are transferred from Kirby to Nell then there no tax sequences. According to the IRS, any transfer of property between husband and wife during the process of Negotiating their divorce Agreement is non taxable event . Kirby's basis in the stock would be $150,000, at the same time basis in the house would be $300,000.
The amount of 50000 would be considered as Alimony
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