For instance, if 100 shares of stock are part of the marital property to be divided in half, one party gets 50 shares and the other party gets the remaining 50 shares. The IRS allows divorcing spouses to each keep the same cost basis and holding period for an investment they already own.
How can I protect my investments from divorce?
Protecting Your Money in a Divorce
- Hire an experienced divorce attorney. Ideally, this person will emphasize mediation or collaborative divorce over litigation.
- Open accounts in your name only.
- Sort out mortgage and rent payments.
- Be prepared to share retirement accounts.
What to know about savings bonds during divorce?
There are different types of savings bonds that come in different monetary increments. Reissuing a bond or changing a name, ownership title, or beneficiary on a bond requires legal documentation. It’s important to understand bond maturation and the tax consequences of dividing savings bonds during a divorce.
How are assets divided during and after a divorce?
Because Section 1041 (a) of the Internal Revenue Code generally mandates tax-free treatment for transfers between spouses of real estate, personal property, investments held in taxable accounts, business ownership interests and similar assets both before the divorce and at the time the divorce becomes final.
Is the holding period of an investment the same after a divorce?
The same is true for post-divorce transfers between the parties, provided they are made incident to divorce, as explained in more detail in the right-hand box. Remember: After a tax-free transfer, the recipient spouse’s tax basis in the investment is the same as before and so is the holding period.
Do you have to pay taxes on property divided in a divorce?
The general rule is that the division of property, including cash, between divorcing spouses has no immediate federal income tax or federal gift tax consequences. Why?
