Hi and welcome to Just Answer!Yes - that is possible - but most likely you will need a qualified CPA or a tax attorney helping you with the process.Most likely - there will be two main steps:1. the corporation will be reorganized (divided) into two C-corporations with the same proportion of the ownership. The main purpose is to qualify for the tax free reorganization under sections 354-368 You may find great explanation here - but that would be relatively complex procedure to do on your own.Current Developments in Tax-Free Corporate Reorganizations2. the second step would be to transfer shares of C-corporations between you and your spouse - that is a tax free transaction. See IRS publication 504 - www.irs.gov/pub/irs-pdf/p504.pdfsee page 18 - Generally, no gain or loss is recognized on a transfer of property from you to (or in trust for the benefit of):--Your spouse, or--Your former spouse, but only if the transfer is incident to your divorce.
Seems as the link I posted got corrupted...Please copy-paste this string into your browser address http://www.steptoe.com/attachment.html/3177/Current+Developments+in+Tax-Free+Reorganizations-+PLI+.doc