Daniel Clement: Divorce Tax Tips: The Bottom Line

1. While two assets may have the same "value" they may not be equal

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Two assets, though equal in value, may be treated differently for tax purposes. Capital gains taxes for instance are calculated based on the profit reaped from the sale of the asset. The gain is the difference between the sale price and the asset's cost basis. Though the assets may at the time of divorce be equally valued, the asset which cost less may have a bigger capital gain, resulting in a higher tax bill

In a common scenario, a couple possesses a stock portfolio and a home equally valued- which one should you select? A homeowner is permitted to exempt $250,000 ($500,000 for a couple) from capital gains from the sale of their principal residence if he/she occupied the home for two of the preceding five years. The stock portfolio will be taxed on each stock's capital gain.

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