# 26 U.S.C. § 1041: Transfers of property between spouses or incident to divorce

Source: OLRC release point 119-134 <https://uscode.house.gov/us/usc/119-134/t26/s1041>. Cite pinpoints as 26 U.S.C. § 1041(a)(1).

## § 1041(a) General rule

No gain or loss shall be recognized on a transfer of property from an individual to (or in trust for the benefit of)—

**§ 1041(a)(1)** a spouse, or

**§ 1041(a)(2)** a former spouse, but only if the transfer is incident to the divorce.

## § 1041(b) Transfer treated as gift; transferee has transferor’s basis

In the case of any transfer of property described in subsection (a)—

**§ 1041(b)(1)** for purposes of this subtitle, the property shall be treated as acquired by the transferee by gift, and

**§ 1041(b)(2)** the basis of the transferee in the property shall be the adjusted basis of the transferor.

## § 1041(c) Incident to divorce

For purposes of subsection (a)(2), a transfer of property is incident to the divorce if such transfer—

**§ 1041(c)(1)** occurs within 1 year after the date on which the marriage ceases, or

**§ 1041(c)(2)** is related to the cessation of the marriage.

## § 1041(d) Special rule where spouse is nonresident alien

Subsection (a) shall not apply if the spouse (or former spouse) of the individual making the transfer is a nonresident alien.

## § 1041(e) Transfers in trust where liability exceeds basis

Subsection (a) shall not apply to the transfer of property in trust to the extent that—

**§ 1041(e)(1)** the sum of the amount of the liabilities assumed, plus the amount of the liabilities to which the property is subject, exceeds

**§ 1041(e)(2)** the total of the adjusted basis of the property transferred.

Proper adjustment shall be made under subsection (b) in the basis of the transferee in such property to take into account gain recognized by reason of the preceding sentence.

## Regulations

- [Treas. Reg. § 1.1041-1T](/26/reg/1.1041-1T.md): Treatment of transfer of property between spouses or incident to divorce (temporary). (interprets § 1041)
- [Treas. Reg. § 1.1041-2](/26/reg/1.1041-2.md): Redemptions of stock. (interprets § 1041)

## Final rules

- [68 FR 1534](https://www.federalregister.gov/documents/2003/01/13/03-646/constructive-transfers-and-transfers-of-property-to-a-third-party-on-behalf-of-a-spouse) (2003): Constructive Transfers and Transfers of Property to a Third Party on Behalf of a Spouse

## Leading cases

- [Blatt v. Commissioner, 102 T.C. 77 (1994)](https://www.courtlistener.com/opinion/4694940/blatt-v-commissioner/)
- [Young v. Commissioner, 113 T.C. 152 (1999)](https://www.courtlistener.com/opinion/4695602/young-v-commissioner/)
- [Godlewski v. Commissioner, 90 T.C. 200 (1988)](https://www.courtlistener.com/opinion/4706729/godlewski-v-commissioner/)

## Connections

Cites: none

Cited by: § 36 First-time homebuyer credit; § 50 Other special rules; § 72 Annuities; certain proceeds of endowment and life insurance contracts; § 121 Exclusion of gain from sale of principal residence; § 143 Mortgage revenue bonds: qualified mortgage bond and qualified veterans’ mortgage bond; § 267 Losses, expenses, and interest with respect to transactions between related taxpayers; § 382 Limitation on net operating loss carryforwards and certain built-in losses following ownership change; § 424 Definitions and special rules; § 453B Gain or loss on disposition of installment obligations; § 1015 Basis of property acquired by gifts and transfers in trust

## Amendments

- 1984-07-18: [Pub. L. 98-369](/26/act/98-369.md), 98 Stat. 793
- 1986-10-22: [Pub. L. 99-514](/26/act/99-514.md), 100 Stat. 2853
- 1988-11-10: [Pub. L. 100-647](/26/act/100-647.md), 102 Stat. 3584