When divorce happens to you as a small-business owner, you can face significant tax consequences.

Here’s what you need to know to get favorable tax results.

Tax-Free Transfer Rule Usually Applies to Asset Splits

The general tax rule in a divorce is that you can divide up most assets, including cash, between you and your soon-to-be ex-spouse without any federal income or gift tax consequences.1

When an asset falls under the tax-free transfer rule, the ex-spouse who receives the asset takes over its existing tax basis (for tax gain/loss purposes) and its existing holding period (for short- or long-term holding period purposes).

Warning. The tax-free transfer rule applies only if your soon-to-be-ex is ... Log in to view full article.