Tax Tip of the Week*

TAXES AND PROPERTY DISTRIBUTIONS

When assets (and liabilities) are whacked up between husband and wife going through a divorce, with rare exception, all such movement of assets are non-taxable and non reportable events. From a tax point of view, you can do whatever you want with assets and liabilities between husband and wife. However, that does not mean there are no tax consequences to the dividing up of the assets. It is important to keep in mind that different assets come with potentially different tax costs or burdens – and even though those tax costs or burdens may not rear their ugly heads immediately, down the road, whether it be a year or 20 years later, there very well may be a tax issue. A simple illustration is $100,000 of cash has no tax issues; $100,000 of stock that cost $30,000, and therefore has a $70,000 gain, has significant tax issues.