US Code

Public Law 119-73 (01/23/2026)

26 U.S.C. § 1041

Transfers of property between spouses or incident to divorce

(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)—
(1)
a spouse, or
(2)
a former spouse, but only if the transfer is incident to the divorce.
(b)

Transfer treated as gift; transferee has transferor’s basis

In the case of any transfer of property described in subsection (a)—
(1)
for purposes of this subtitle, the property shall be treated as acquired by the transferee by gift, and
(2)
the basis of the transferee in the property shall be the adjusted basis of the transferor.
(c)

Incident to divorce

For purposes of subsection (a)(2), a transfer of property is incident to the divorce if such transfer—
(1)
occurs within 1 year after the date on which the marriage ceases, or
(2)
is related to the cessation of the marriage.
(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.

(e)

Transfers in trust where liability exceeds basis

Subsection (a) shall not apply to the transfer of property in trust to the extent that—
(1)
the sum of the amount of the liabilities assumed, plus the amount of the liabilities to which the property is subject, exceeds
(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.

Pub. L. 98–369, div. A, title IV, § 421(a)98 Stat. 793Pub. L. 99–514, title XVIII, § 1842(b)100 Stat. 2853Pub. L. 100–647, title I, § 1018l102 Stat. 3584(Added , , ; amended , , ; ()(3), , .)

Editorial Notes

Amendments

Pub. L. 100–6471988—Subsec. (d). substituted “Subsection (a)” for “Paragraph (1) of subsection (a)” and “the spouse (or former spouse)” for “the spouse”.

Pub. L. 99–5141986—Subsec. (e). added subsec. (e).

Statutory Notes and Related Subsidiaries

Effective Date of 1988 Amendment

Pub. L. 100–647, title I, § 1018l102 Stat. 3584()(3), , , provided that the amendment made by that section is effective with respect to transfers after .

Effective Date of 1986 Amendment

Pub. L. 99–514Pub. L. 98–369, div. Asection 1881 of Pub. L. 99–514section 48 of this titleAmendment by effective, except as otherwise provided, as if included in the provisions of the Tax Reform Act of 1984, , to which such amendment relates, see , set out as a note under .

Effective Date

Pub. L. 98–369, div. A, title IV, § 421(d)98 Stat. 795

“(1)

In general .—

Except as otherwise provided in this subsection, the amendments made by this section [enacting this section and amending sections 47, 72, 101, 453, 453B, 1001, 1015, and 1239 of this title] shall apply to transfers after the date of the enactment of this Act [] in taxable years ending after such date.
“(2)

Election to have amendments apply to transfers after 1983 .—

If both spouses or former spouses make an election under this paragraph, the amendments made by this section shall apply to all transfers made by such spouses (or former spouses) after .
“(3)

Exception for transfers pursuant to existing decrees .—

Except in the case of an election under paragraph (2), the amendments made by this section shall not apply to transfers under any instrument in effect on or before the date of the enactment of this Act unless both spouses (or former spouses) elect to have such amendments apply to transfers under such instrument.
“(4)

Election .—

Any election under paragraph (2) or (3) shall be made in such manner, at such time, and subject to such conditions, as the Secretary of the Treasury or his delegate may by regulations prescribe.”
, , , provided that:

Plan Amendments Not Required Until January 1, 1989

Pub. L. 99–514section 1140 of Pub. L. 99–514section 401 of this titleFor provisions directing that if any amendments made by subtitle A or subtitle C of title XI [§§ 1101–1147 and 1171–1177] or title XVIII [§§ 1800–1899A] of require an amendment to any plan, such plan amendment shall not be required to be made before the first plan year beginning on or after , see , as amended, set out as a note under .