Generally speaking, cash and property divided in a divorce is not taxable income or tax deductible to either party. However, if she received certain tax privileged assets, such as a distribution from the spouse’s 401K through a qualified domestic relations order (QDR0), she has a limited number of options of what to do with that money, some of which involve paying tax. If she received a (QDR0) she would also have received a 1099 form from the trustee.
