F owns land with an adjusted basis of $45,000 and a fair market value of $72,000.Which one of the following is true of a transfer by F to his spouse, G?
A)If F gives a one-half interest in the land to G as a wedding gift, gain of $13,500 is recognized.
B)If F sells the land to G for $50,000 incident to their divorce, no gain is recognized and G's basis is $45,000.
C)If F transfers the land to G without consideration incident to their divorce, gain of $13,500 is recognized.
D)If F sells the land to G for $72,000 incident to their divorce, gain of $27,000 is recognized and G's basis is $72,000.

Question

Quizplus · Accepted Answer

When property transfers between spouses incident to a divorce, there is no gain or loss recognized on the transfer, and the receiving spouse takes over the same adjusted basis that the transferring spouse had in the property. Therefore, option B is correct. Option A is incorrect because a gift is not incident to a divorce, and the gain would be recognized. Option C is incorrect because a transfer without consideration is also not incident to a divorce, and the gain would be recognized. Option D is incorrect because if F sold the property to G for the fair market value of $72,000, then there would be no gain or loss recognized, and G's basis would be $72,000.

F Owns Land with an Adjusted Basis of $45,000 and a Fair