Jacob and Emily were co-owners of a personal residence.As part of their divorce agreement entered into in 2017, Emily paid Jacob cash for his interest in the personal residence.This cash payment results in a taxable gain to Jacob if he receives more cash than his share of the cost of the residence.

Question

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Under U.S. tax law, transfers of property between spouses or incident to divorce are generally not taxable events. The transfer of Jacob's interest in the personal residence to Emily as part of their divorce agreement would not result in a taxable gain to Jacob, regardless of the amount of cash he receives.

Jacob and Emily Were Co-Owners of a Personal Residence