As part of the divorce agreement, Hugh transfers his ownership interest in their personal residence to Monica.The house had been jointly owned by Hugh and Monica and the adjusted basis is $590,000.At the time of the transfer to Monica, the fair market value is $900,000.What is the recognized gain to Hugh, and what is Monica's basis for the house?
A)$0 and $295,000.
B)$0 and $400,000.
C)$60,000 and $590,000.
D)$310,000 and $800,000.
E)None of the above.

Question

Quizplus · Accepted Answer

In a divorce-related property transfer, no gain or loss is recognized by the transferor. Monica's basis in the house is the same as the adjusted basis of the property in the hands of Hugh, which is $590,000.

As Part of the Divorce Agreement, Hugh Transfers His Ownership