Divorce and Capital Gains Tax
Internal Revenue Code sec. 1041 provides that where an asset, otherwise subject to capital gains tax, is transferred from one spouse to another pursuant to a court order, such as by decree of dissolution or divorce, no gain is recognized. This means that if a husband transfers a house to his ex-wife as part of a dissolution settlement, wife will not pay any tax upon the transfer. However, when (if) the wife sells the house and does not roll that entire gain over into another residence, then she will be solely liable for any capital gains tax incurred, even if the sale of the house is under duress. It is particularly painful when you have failed to plan for the transfer with your attorney and you must sell your house shortly after a divorce/dissolution proceeding just to stay above water.
Make sure you discuss the tax ramifications of your decision with your attorney prior to entering into settlement negotiations. If possible, the expected tax consequences should be addressed in the separation agreement so as to edify the parties and reduce the possibility of future misunderstanding. This involves good communication with your attorney. The way we will handle your case involves a three-step approach: Advising, Negotiating and Litigating. Advising is more than helping you fill out forms and charging a retainer fee; it is a meaningful two-way communication that shapes what the attorney client relationship will become. Failing this dialogue, its absence will become achingly apparent when the attorney goes behind closed doors to discuss your case. Negotiation is also a two-way street involving a realistic acceptance of your position, articulation of the goals of your case and the realities of the adversarial process. If you have communicated successfully with your attorney, you can expect to prepare a legal strategy that will focus on your desired outcome. Those parameters will be the basis of all discussions with the other side. Litigation results when you cannot reach a desired result through negotiation. Your attorney must prepare for litigation from the first consultation in order to maximize the chances of reaching your desired result. The work of an attorney in the court room is the pinnacle of years of training and experience. If your attorney is unable or unwilling to litigate, your ability to negotiate a favorable settlement will be compromised.
Going through a divorce and/or custody battle is a traumatic a heart-wrenching process. You must choose an attorney with whom you are completely comfortable. Often, you will have to choose the better of two bad options and the only input you will have will be the experience and judgment of your counsel. Somewhere out there, you can find the attorney that is right for you. Finding the right family law attorney starts with a free face-to-face consultation. To schedule an appointment, please call me at (937) 879-9542.
Jamie L. Anderson dedicates her practice to representing families through the changes of a divorce or dissolution. She has made herself one of Greene County’s most prominent matrimonial attorneys and will use her experience to secure your family, your finances and your future. Jamie practice matrimonial law throughout the Miami Valley in the Greene, Montgomery, Clark, Miami,Warren, Fayette Domestic Relations and Juvenile Courts. Contact Jamie L. Anderson at (937) 879-9542 or visit www.OhioDivorceAttorney.com to learn more.
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