Module 4 - Property and Tax Related Issues Flashcards
(14 cards)
What is the procedure for determining the fair market value of an asset during divorce?
Appraisal
Appraisal is used when an asset is to be sold or divided.
What are Career Assets?
Assets tied to one’s career (e.g., health insurance, stock options, retirement plans, etc.)
These assets are important in divorce settlements.
Define Community Property.
Any property not deemed ‘separate’ in community property states, likely subject to 50/50 division
Separate property includes assets owned before marriage or obtained by gift or inheritance.
What does ‘Equitable’ mean in the context of property division?
Means fair; does not necessarily mean equal
Equitable division considers various factors.
What is Equitable Division of Property?
Method of dividing property based on considerations like length of marriage, wealth, and health of partners
It aims for fair distribution, not equal.
What is Goodwill in business valuation?
The value of a business beyond its tangible assets, including prestige, name recognition, and customer loyalty
It is an intangible asset.
What is Joint Property?
Property held in the name of more than one person
Joint property can complicate division in divorce.
What does Lis Pendens indicate?
A piece of property cannot be transferred during a pending lawsuit once a notice has been filed
It affects the disposition of the property.
Define Marital Property.
Accumulated income and property acquired by spouses during marriage subject to equitable division
Definitions may vary by state.
What is a Property Settlement Note?
A note from the payor to the payee for an agreed-upon length of time with a reasonable interest rate
It can be collateralized.
What does Recapture refer to in tax terms?
Deductions taken in a previous year’s income
It can affect current tax liabilities.
What does Section 1041 of the IRS Code state?
Any transfer of property between spouses during marriage or incident to divorce is tax-free
No gain or loss is recognized for tax purposes.
Define Separate Property.
Generally considered any property owned before marriage or acquired during marriage by one partner’s separate property
Definitions vary by state.
What did the Tax Reform Act of 1984 introduce regarding marital property?
Allowed marital property to be transferred without tax implications and simplified the definition of spousal support
It prevents property settlements from being disguised as spousal support.
