It's possible that the IRS information return matching program may pick up that your return doesn't reflect sale proceeds that match the Form 1099-S. In case you receive an audit letter from the IRS or your state, be prepared to present documentation such as your divorce decree and evidence that the proceeds were split pursuant to the judgment.
See the Instructions for Form 1099-S, under Multiple Transferors. If the party who completes the 1099-S receives an uncontested allocation of gross proceeds from spouses who were married at the time of closing, Form 1099-S should have been filed for each spouse according to the allocation. If there are other transferors, they must make a reasonable effort to contact either spouse to request an allocation.
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