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Lane
Lane, JD, CFP, MBA, CRPS
Category: Tax
Satisfied Customers: 10172
Experience:  Law Degree, specialization in Tax Law and Corporate Law, CFP and MBA, Providing Financial & Tax advice since 1986
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If a spouse transfers, quit claim half of the value of the

Customer Question

If a spouse transfers, quit claim half of the value of the residence into to corporation that the spouse owns, does the other spouse have a claim on the half of the property now owned by a corporation? After the first spouse sells the corporation?
Submitted: 5 months ago.
Category: Tax
Expert:  Lev replied 5 months ago.

For tax purposes - that will be treated as having two transactions - transfer from one spouse to another AND transfer from shareholder to the corporation.

- transfers between spouses are NOT taxable events (unless the spouse is a non US citizen) - so nothing is reported here - and the basis remains the same after the transfer.

- transfer to the corporation in exchange of stocks is not taxable either - that is classified as contribution and added to the basis of shares.

But when the corporation is sold - the shareholder will report that as a sale of shares - and teh gain will be reduced by that adjusted basis.

Questions?

Expert:  Lev replied 5 months ago.

.

Customer: replied 5 months ago.
I received a reply concerning tax..... My question concerned California community property law. Half of the home was quit claimed into a corporation without both parties agreeing. The half transferred into the corporation. The half of the property then belonged to the corporation, no longer to the individual. The individual sold the corporation, now no longer owned his half of the home. Does the other party have any claim to the half of the home transferred and now recorded as an asset of the corporation?
Expert:  Lane replied 5 months ago.

Hi,

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I have a different answer.

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This depends on when the home was purchsed. Generally, in community property states, money earned by either spouse during marriage and all property bought with those earnings are considered community property that is owned equally by husband and wife. Likewise, debts incurred during marriage are generally debts of the couple.

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So transferring (that's another question, how was it conveyed (gifted, purchased, transfered for ownership of stock in the corporation?) may accompplish nothing if both the corporation and the home were already community property.

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Which brings up another question; When was the corporation formed?

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If the corporation and the home were both formed AFTER marriage, the you've effectively done nothing here. (in terms of changing ownership - in a community property state)

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let me know, if you have additional detail (such as the corporation being formed, or hose being purchased, BEFORE the marriage)

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If this HAS helped, and you DON’T have other questions … I'd appreciate a positive rating (using the faces or stars on your screen, and then clicking “submit")

JustAnswer will not credit me for the work unless you do.

...

Thank you!

Lane

I have a law degree, (Juris Doctorate), with concentration in Tax Law, Estate law & Corporate law, an MBA, with specialization in financial accounting & tax, a BBA, and CFP & CRPS designations, as well - I’ve been providing financial, Social Security/Medicare, estate, corporate, non-profit, and tax advice, since 1986.

Expert:  Lane replied 5 months ago.

I see tht you have asked this as a new question rather than giving the specific answers needed to answer correctly HERE, so I'll generalize

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If the corportion was created by the husband AFTER marriage the the wife already owner half of it.

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And if the property contributed to the corporation was purchased after marriage thay both already owned that as well

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The transfer may as well not have happened.

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The wife still owns half.

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However if either asset was created BEFORE marriage the answer is different

Customer: replied 5 months ago.
Many thanks Lane'
Your response is clear, precise and to the point. this is what I was asking in the first place. Your firm should be proud to have such talent on board, your contribution should be rated as superior asset and should be treated as such. Again many thanks.
Prentis Davis
Expert:  Lane replied 5 months ago.

You're very welcome ... Your positive rating … (by using those the stars or faces on your screen, and then clicking “submit”) …is thanks enough!

That’s how we’re credited for the work here

...

Thank you,

Lane

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