Yes, we know how it's done, and it depends on the divorce agreement. Either the divorce agreement or you and your former spouse must arrive at an agreement about whether you are reporting all of the sale or 46% of the sale, assuming 54% would be reported by your former spouse.
If you are required to report 46% of the sale of the home, then you would first determine the full cost basis which is original purchase price, purchase expenses and any capital improvements cost. Once you have that figure you would multiply that by your 46%. Next you would use your percentage times the selling price and selling expenses.
- 46% of selling price less 46% of selling expenses minus 46% of cost = taxable gain for you.
If the 1099-S was received in only one name or social security number (SSN) there's no real concern because you have your agreement about how it will be handled. Keep all the papers with your tax return should you need them later.
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