DIVORCE, TAXATION, AND STOCK OPTIONS Divorce can be a major disruption to a family's financial plan

In keeping with other elements of the tax code that offer preference to married individuals, Internal Revenue Code (IRC) Section 1041 was enacted to relieve the transfer of possessions in a divorce by not acknowledging gain or loss. Rather, the code treats a transfer in the method it deals with gifts. The transferor's tax basis is communicated along with the possession to the other spouse with limited exposure to taxation. This uses to many divorce-related transfers. A typical asset that falls into this type of transfer, is the individual home. A spouse will get the home and the transfer of the title would often be thought about, a tax-free transfer.