Transfers to Spouse

No gain or loss is recognized on a transfer of property from an individual to (or in trust for the benefit of) a spouse or a former spouse if incident to divorce. This rule does not apply to the following.

• The recipient of the transfer is a nonresident alien.

• A transfer in trust to the extent the liabilities assumed and the liabilities on the property are more than the property’s adjusted basis.

• A transfer of certain stock redemptions, as discussed in Regulations section 1.1041-2.

Any transfer of property to a spouse or former spouse on which gain or loss is not recognized is treated by the recipient as a gift and is not considered a sale or exchange. The recipient’s basis in the property will be the same as the adjusted basis of the property to the giver immediately before the transfer. This carryover basis rule applies whether the adjusted basis of the transferred

28 Chapter 1 Gain or Loss Publication 544 (2025)

property is less than, equal to, or greater than either its FMV at the time of transfer or any consideration paid by the recipient. This rule applies for determining loss as well as gain. Any gain recognized on a transfer in trust increases the basis.

For more information on transfers to a spouse, see Property Settlements in Pub. 504, Divorced or Separated Individuals.