Sold rental property all funds went to the ex spouse and is documented in seller disclosure do I have to pay taxes on the money I never received

[dabshire71269]

It is. It in the divorce degree

[JaimeG · Accepted solution]

Transfer Between Spouses

Generally, no gain or loss is recognized on a transfer of property from you to (or in trust for the benefit of):

    Your spouse, or

    Your former spouse, but only if the transfer is incident to your divorce.

This rule applies even if the transfer was in exchange for cash, the release of marital rights, the assumption of liabilities, or other consideration. 

A property transfer is incident to your divorce if the transfer: Occurs within one year after the date your marriage ends, or Is related to the ending of your marriage. If it is a division of the marital estate it is NOT taxable -- it was already yours in the first place.