Cost Basis

[Christian]

A recently divorced lady contacted me in regard to the cost basis of stocks she received in a divorce settlement with her former husband. She will likely sell some or all of this position. She did not purchase any of these shares. The cost basis would be what her former husband paid for the shares some time back. Is this correct.

Or is her basis one half of what he paid?

[Roberts]

It's what the ex-husband paid per share originally.

[Lion EA]

Plus any reinvested dividends?

[mcb39]

IRS (l734) the basis of the transferred property in the hands of the transferee is the transferor' adjusted basis in the property, in the case of a divorce.

(Code Sec. 1040(e) The transferee's basis is adjusted to take into account any gain recognized.

[Guest Taxed]

Each season I run into a similar situation with divorced couples. If the portfolio is being split pursuant to a divorce decree and if you feel that your clients have some disagreement between them when you are doing the taxes, ask to get their attorney(s) give you a call prior to submitting the return. You will save yourself a lot of grief later. Before I did this I used to do amendments right after the season to fix the issue and with this new 8949 form it is no fun if there are a lot of trades. Also my suggestion if you charge by the form only, you may want to consider to charge by the form and time spent for Sch D with these type of issues.