Under a divorce agreement, R was required to transfer his share of the jointly owned home to his ex-wife, L.The home cost $72,000 and was worth $124,000 at the time of the transfer.R has no gain and L's basis is $72,000.

Question

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Since R is transferring his share of the home to his ex-wife as part of a divorce agreement, it is considered a transfer incident to divorce and therefore not taxable. L's basis in the home will be the same as R's previous basis of $72,000. Thus, there is no gain to R and L's basis remains at $72,000.

Under a Divorce Agreement, R Was Required to Transfer His