Section 1041

AAA

DEFINITION of 'Section 1041'

A section of the Internal Revenue Code that mandates that any transfer of property from one spouse to another is income tax-free. No deductible loss or taxable gain can be declared. This section applies to transfers during marriage as well as in the divorce process. Section 1041 was enacted in order to simplify the consolidation of marital assets.

INVESTOPEDIA EXPLAINS 'Section 1041'

Section 1041 does not apply to transfers to nonresident-alien spouses, certain transfers of mortgaged property between trusts or transfers of U.S. savings bonds. This section also places the tax burden on the recipient of any transfer of marital property incident to a divorce (the property is treated as a gift); therefore, it can be in the interest of a divorcing spouse to negotiate for assets that have minimal taxable appreciation.

RELATED TERMS
  1. Gift Tax

    A federal tax applied to an individual giving anything of value ...
  2. Deduction

    Any item or expenditure subtracted from gross income to reduce ...
  3. Marital Deduction

    A tax deduction that allows an individual to transfer some assets ...
  4. Transfer

    A change in ownership of an asset, or a movement of funds and/or ...
  5. Transfer Tax

    Any kind of tax that is levied on the transfer of official documents ...
  6. Total Annual Loan Cost (TALC)

    The projected total cost that a reverse mortgage holder should ...
Related Articles
  1. Home & Auto

    Tips For The Prospective Landlord

  2. Retirement

    Holding Titles On Real Property

  3. Taxes

    The Tax Benefits Of Having A Spouse

  4. Options & Futures

    Getting Started On Your Estate Plan

Hot Definitions
  1. Turkey

    Slang for an investment that yields disappointing results or turns out worse than expected. Failed business deals, securities ...
  2. Conduit Issuer

    An organization, usually a government agency, that issues municipal securities to raise capital for revenue-generating projects ...
  3. Financing Entity

    The party in a financing arrangement that provides money, property, or another asset to an intermediate entity or financed ...
  4. Hyperinflation

    Extremely rapid or out of control inflation. There is no precise numerical definition to hyperinflation. Hyperinflation is ...
  5. Gross Rate Of Return

    The total rate of return on an investment before the deduction of any fees or expenses. The gross rate of return is quoted ...
  6. Debit Spread

    Two options with different market prices that an investor trades on the same underlying security. The higher priced option ...
Trading Center