Section 1041

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.

BREAKING DOWN '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. Section 1231 Property

    A tax term relating to depreciable business property that has ...
  2. IRS Publication 504

    A document published by the Internal Revenue Service that provides ...
  3. Transfer Tax

    Any kind of tax that is levied on the transfer of official documents ...
  4. Direct Transfer

    A transfer of assets from one type of tax-deferred retirement ...
  5. Marital Property

    A U.S. state-level legal distinction of a married individual's ...
  6. Marital Deduction

    A tax deduction that allows an individual to transfer some assets ...
Related Articles
  1. Markets

    What Is Section 1231 Property?

    Section 1231 property is depreciable business property that’s held for a year or longer.
  2. Financial Advisor

    How To Manage Your Finances Through A Divorce

    Dividing assets and liabilities in a divorce can be a sad, complicated task. But with some planning, patience and the help of a financial adviser, splitting couples can avoid some obvious and ...
  3. Retirement

    Divorcing? The Right Way to Split Retirement Plans

    Mishandling how you define and allocate retirement-plan assets in a divorce can cost you plenty in taxes and aggravation. Here's how to do it right.
  4. Personal Finance

    Transferring Credit Card Balances To A New Card

    Before you take advantage of that new credit card's 0% interest balance transfer offer, read our step-by-step guide.
  5. Financial Advisor

    Top Tips for Helping Clients Through a Divorce

    It may take a delicate touch to properly assist clients who are going through a divorce. Here are some tips.
  6. Personal Finance

    Divorce Funding: A New Investment Opportunity?

    Learn how companies are making millions investing in the broken marriages of others. Discover how one person's divorce can be another's investment opportunity.
  7. Personal Finance

    The Fundamentals Of Spousal Support Taxation

    The spousal support that is paid out after a divorce can have varying tax implications. We'll look at what you need to know to settle on the best tax solution.
  8. Personal Finance

    Avoid Capital Gains Tax On Your Home Sale

    If you have property to sell and want to avoid capital gains tax, a Section 1031 exchange may be the answer.
  9. Financial Advisor

    How to Protect Your Retirement After a Divorce

    Divorce is never fun, but knowing the rules and anticipating the impact of retirement plan division and pension payouts can make things easier.
  10. Financial Advisor

    Top Tips for Keeping Clients’ Divorces Private

    For the wealthy, divorce can mean negative public fallout if certain details of their private lives come out. Here's how to keep those details private.
RELATED FAQS
  1. How does a divorce impact regular social security benefits?

    If a person divorces and he is already receiving social security benefits, does he need to share those benefits with his ... Read Answer >>
  2. Are there any regulations on transfer pricing?

    Learn about transfer pricing, its role in intra-business calculations, and how the U.S. government regulates transfer pricing ... Read Answer >>
  3. How can I protect my business from my spouse during a high net worth divorce?

    Understand what constitutes a high-net-worth divorce, and learn how business owners can protect their companies when going ... Read Answer >>
  4. If an individual still has his or her former spouse as the beneficiary of an IRA, ...

    It depends. Generally, divorce does not effectively change a beneficiary designation unless the divorce decree makes a stipulation ... Read Answer >>
  5. How are Social Security benefits calculated for divorced spouse?

    Find out how the Social Security retirement benefit for divorced spouses is calculated, including the impact of age and outside ... Read Answer >>
  6. How does transfer pricing help business?

    Explore several ways that transfer pricing helps businesses. Transfer pricing can often help streamline accounting and business ... Read Answer >>
Hot Definitions
  1. Dove

    An economic policy advisor who promotes monetary policies that involve the maintenance of low interest rates, believing that ...
  2. Cyclical Stock

    An equity security whose price is affected by ups and downs in the overall economy. Cyclical stocks typically relate to companies ...
  3. Front Running

    The unethical practice of a broker trading an equity based on information from the analyst department before his or her clients ...
  4. After-Hours Trading - AHT

    Trading after regular trading hours on the major exchanges. The increasing popularity of electronic communication networks ...
  5. Omnibus Account

    An account between two futures merchants (brokers). It involves the transaction of individual accounts which are combined ...
  6. Weighted Average Life - WAL

    The average number of years for which each dollar of unpaid principal on a loan or mortgage remains outstanding. Once calculated, ...
Trading Center