The property settlement called for a payment of $225,000 as a buyout for my portion of marital property. My former spouse had the option to sell or refinance property. What had been his primary residence sold before the divorce was final but after the property settlement was executed. The funds due to me were paid at the closing of the sale. I received a 1099-S from the Title company even though my attorney made clear that the payment was to be a payout and not as a sale of the residence. I have lived out of state for 5 years therefore do not meet the rule of living in the residence 2 out of the last 5 years so do not meet the exclusion to sell this as my primary residence. I know I need to show the 1099-S but how do I then back it out so that the transaction is a non-taxable transfer of property pursuant to a divorce property settlement?
