@Qiang Jin wrote:
Any risks that IRS to audit/challenge this solution?
Yes, lacks substance if the IRS wants to challenge the reporting; they could invoke the step transaction doctrine.
See https://www.irs.gov/pub/irs-wd/0826004.pdf
See also https://www.thetaxadviser.com/issues/2021/may/step-transaction-doctrine.html
The bottom line is that you are not allowed to structure a series of transactions the sole purpose of which is the avoidance of federal income tax. There's only one in your case (the transfer to your wife), but there is still that risk.
