Posted by Nate(DC) on November 07, 2002 at 20:24:01:
I’d think that if you’re on the deed and are receiving part of the profits, you would be responsible for part of the gain, but you should check with a tax advisor to be sure.
NT
divorce and capitol gains - Posted by christine
Posted by christine on November 07, 2002 at 20:07:26:
The judge has ordered all property sold and divided. Question: My ex bought and sold property and bought vacant land with a large capitol gain. The judge has ordered that part of the profits from this sale should go to me. I was not on the original piece of property or the sale of that property–all money from this was used to puchase the land that will be sold and split. Will I be responsible for any of the capitol gains? The land to be sold does have my name on the deed.
Re: divorce and capitol gains - Posted by Diane (TX)
Posted by Diane (TX) on November 08, 2002 at 16:42:46:
You will be responsible for capital gains on your share of the sale. If you get 50% of the proceeds, you get 50% of his basis and you’ll recognize 50% of the gain. (His holding period carries over to you, too, so it will be long-term gain if held for more than a year.) Your divorce agreement may require your ex to reimburse you for the tax, but this is a negotiated point.
Your attorney should be familiar with the tax aspects of settlements and the tax aspects should be considered in your agreement. For example, assume the land has a fair market value of $100,000, but has a $25,000 tax liability associated with it. Value the land at $75,000. On the other hand, a personal residence valued at $100,000 with a deferred but tax-free gain should be valued at $100,000.