@mlnate1 wrote:
Thanks again for the response. This transaction will NOT be considered alimony. In that case, what are the taxable consequences to the recipient ex-spouse? Is it considered
1. a non-taxable gift?
2. a non-taxable exchange with equal value to each party (i.e. prepayment of 10 yrs of court-ordered alimony in exchange for forgiveness of all remaining obligations under court-ordered divorce settlement?
3. fully taxable income in the amount of $300K to recipient ex-spouse.
Thoughts?
None of the above. It is a property settlement pursuant to a divorce. There's no need to argue "equal value" or anything else. It's not a gift so no gift tax return is required. Division of property (money, assets, etc.) as part of a divorce are not taxable or deductible by either party.
