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NC Divorce CPA discusses Redemption of Closely Held Corporate Stock in Divorce Settlements | Form 1120-S and Form 8824

Wilmington NC divorce CPA discusses closely held stock tranfers in divorce settlements.

Gary Bode, divorce CPA. Many divorce consequences consequences can be avoided. For a free initial phone consult, please call 399-2705.

Divorcing couples sometimes own all the stock of an S Corporation. Divorce property settlements can decree transfer of one spouse’s shares to the other spouse. Recent court cases define the tax treatment of such stock transfers. A divorce CPA consults on these tax implications and ensures correct preparation on the S Corporation’s Form 1120-S. We  also prepare Form 8824 if required.

“One spouse can escape taxation in divorce stock transfers. Which one? It depends on the divorce decree. Being forewarned is to be forearmed.”
Gary Bode, Wilmington NC divorce CPA and tax accountant

Stock redemption is tax-free to the transferring spouse only if the receiving spouse “accepts” it as a constructive dividend, and then foots the tax bill.

Many other divorce tax issues can be addressed proactively, but often aren’t. Here are a few issues discussed in our previous posts:

  • General discussion of Form 8824, reporting like kind exchanges of property, sometimes required in divorces.
  • Filing status of that last Form 1040. The implications of Married Filing Separately.
  • Form 8857 which requests relief from post divorce tax consequences perpetrated by your ex-spouse.
  • Form 8379, Injured Spouse Allocation.
  • Simply changing your address with the IRS  may prevent the clock running out on some divorce issues. Form 8822. Covering the basics is important.
  • Divorce retirement benefit splitting – QDROs.

We’re a Wilmington NC CPA divorce firm with a virtual office allowing us to provide service to a broader geographical base.

Maybe your town has excellent divorce CPAs. If not, give us a call for a free initial consult at (910) 399-2705.

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