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Split up mutual fund shares tax-free

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in Small Business Tax

Q: My wife and I are getting divorced. I own mutual fund shares worth about $150,000, which are all in a taxable brokerage account in my name. If I transfer some of the shares to her as part of the divorce, do I have to pay tax on the gain over basis? A.R., Monsey, N.Y.

A: No. Your spouse will pick up your basis in the shares that are transferred to her. When she sells the shares, she'll have to pay tax on the appreciation as capital gain. But no gain is realized until a sale occurs. Tip: Consult with your attorney about other tax ramifications relating to the divorce.

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