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Divorced client tells me (in advance - hooray!) of her plans to sell (in 2024) the house she got in the divorce that was final in 2023. She asked about tax repercussions of that plus some other queries. In response I asked if she bought him out, or if there was an agreement to share proceeds of the sale. Neither! She got the house and in exchange he got more of their investment assets. Total value of assets was the same. My first thought is that she gets 100% of the gain with only $250k exclusion and no step-up for "his" portion of the house. But that's just a first thought. Pub 504 and Code Section 1041 talk about basis in the property being the same as if it was a gift from one spouse to the other, with nothing about any step-up even being possible. Yet that seems to leave her with a bigger tax bill than he'll have from their investments. Making me wonder if I should be asking if there was anything in the divorce agreement that talks about equalizing basis. Any advice/references/thoughts for me?

Follow the link Catherine posted.

They don't come to us before. Before the divorce. Before dividing assets. Before dividing children. Even my own son left all his tax return copies that I uploaded to my portal for him to give his lawyer, so his lawyer saw nothing about their partnership, nothing about the tax returns before his ex quit working, nothing about all the monies they took out of his Roth to run the partnership and to live off while the ex's TIRA kept growing, nothing. Sorry, tired and cranky today!

It's rounded to nearest $50.

But you need to know the formula for calculating. They usually involve accumulating inflation amounts until they reach a certain threshold, before an increase is allowed. So prior year calculated amounts that weren't enough are added to the current year calculation, if they didn't reach that threshold in the prior year(s).

https://answers.microsoft.com/en-us/windows/forum/all/downgrade-from-windows-11-to-windows-10/84a2416d-ccfb-4d87-9eee-e1056591e91f After upgrade to Windows 11, if you realize that your system is not working correctly, or some of the crucial features you need are not working as expected, and troubleshooting didn’t helped you, you might want to go back to Windows 10. You can only downgrade to Windows 10 within the 10 days of your upgrade.

It is 39 Year property. 3K of depreciation makes 117K the office basis, which if it was 10% of the home it gets you to a 1.2MM home. Plausible. 3000 square foot home with a 300 square foot office? 7K of expenses does not sound like such a stretch if the home is worth that much, especially if there is a mortgage on it. Not sure about IL property taxes, but again, if the home is worth that amount, the tax bill is not cheap. Not saying these are facts, just making an observation that everything is plausible. If you wait until you file the 2024 return, you could slip in a 1310 and get the depreciation back....that is not the correct way to do it, you should amend and notify the plan administrator of the corrective distributions needed and pay the penalty for the excess contribution. You will get a 2024 1099R from them that includes the earnings. Tom Longview, TX

How could the depreciation be that much unless that also includes office equipment and furniture? I thought home office was 39 year property?

This may well not help that much but I am a bit surprised about the amount of HO depreciation. Does that also include allocation of expenses? Would it be worth checking for the Simplified Method of $5 per square foot. There would be no depreciation, etc. but also no recapture and may not be as large an impact on the overcontribution.