I have a second home that is not qualified as primary residence. The divorce judgment required I sell the house and give 1/2 of the proceed to my ex-wife. Her name was not on title so escrow only issued 1099-S to me for the full amount of the sale proceed. 1/2 of the proceed given to my ex-wife was documented in the HUD-1. How do I file tax return to account for only 1/2 of the proceed, since it was reported to IRS as that I received the full proceed? Thank you
Since you are the sole owner, the result is likely to depend on whether the second house is your separate property or community property. If the former, then under the tax law you would be solely liable for the taxes on any gain; if the latter, then the gain would be divided equally between the two of you and you would each be liable for the tax on his/her half of the gain.
This should have been dealt with in the divorce decree (as I understand the matter, under California law, the court is supposed to take tax issues into account when dividing the community property). You should probably speak with your divorce lawyer to see if anything can be done about that omission.
My answer does not constitute legal advice and may not be relied upon by anyone for any purpose and does not constitute an attorney/client relationship or an offer to form such a relationship. This disclaimer is intended to be fully compliant with the requirements of Treasury Department Circular 230 and the terms thereof are fully incorporated by reference.
Agree with 1st answer. Appears court found 2d home to be community property. If so, your return should have a letter of explanation as to why only half the price is reported. Also wise to verify that your ex is reporting other half.
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