Tax Aspects of Divorce

Tax considerations are important in almost every aspect of a divorce. For example, the built-in tax liability of an asset should be considered for any assets that are subject to division in a divorce action. For example, the allocation of an IRA worth $10,000 to one party and a CD worth $10,000 to the other party would not be equal because the IRA is fully subject to tax at a later time. Likewise, many stocks and bonds and parcels of real property may have built-in capital gains because they have appreciated beyond their purchase price. The tax basis of property should be considered in the property division in a divorce. All property, including business interests, stock options, and other investments must be properly valued in a divorce. Proper valuation includes in certain circumstances the consideration of the reduction in value of the property because of future taxes. The portion of legal services in your divorce that is devoted to tax planning is deductible on your income taxes. Be sure to ask your attorney for a breakdown of his or her services that are devoted to tax planning.

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Divorce is a complicated process. All parties need to understand the tax aspects of divorce. Let Kopper Morgan PC show you how to prepare for dividing assets.

Kopper Morgan PC represents clients in Davis and Woodland, California, and the surrounding cities, including Sacramento, Dixon, Winters, Vacaville, and West Sacramento, and in the following counties: Yolo County, Sacramento County, and Solano County.