There may be no glory in being a family law attorney these days, especially when it comes to dealing with the often challenging economic consequences in a divorce action. Clients may initially contact you with one issue related to their potential divorce, but often these concerns can quickly manifest as emotions and pressures begin to develop. Perhaps the questions attorneys resist the most or feel least comfortable in answering pertain to divorce-related tax matters. Many individuals, including those contemplating divorce, will be reaching out to you for answers to a variety of tax-related divorce questions. So, this may be the best time to revisit some of the questions you may be faced with. Here are ten divorce-related tax issues that all matrimonial and family law attorneys should know. 1. Taxability of Assets Distributed Incident to Divorce In many instances one of the most disputed issues in a divorce is the distribution of the marital assets. This is commonly referred to as “equitable distribution” or “ED”. Under the Internal Revenue Code (IRC) Section 1041 (a), no gain or loss is recognized on the transfer (acquisition or distribution) incident to divorce provided such transfer occurs within one year after the divorce or related to the ending of the marriage. The ending of the marriage is defined pursuant to a divorce or separation agreement and occurs within six years after the date on which the marriage ended. Practice Tip: Often, one of the most significant marital assets is the marital residence and/or a business. The values […]
Monthly Archives: November 2010
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