
From the U.S. Code Online via GPO Access
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[Laws in effect as of January 2, 2001]
[Document not affected by Public Laws enacted between
  January 2, 2001 and January 28, 2002]
[CITE: 26USC1041]

 
                     TITLE 26--INTERNAL REVENUE CODE
 
                        Subtitle A--Income Taxes
 
                  CHAPTER 1--NORMAL TAXES AND SURTAXES
 
          Subchapter O--Gain or Loss on Disposition of Property
 
                  PART III--COMMON NONTAXABLE EXCHANGES
 
Sec. 1041. Transfers of property between spouses or incident to 
        divorce
        

(a) General rule

    No gain or loss shall be recognized on a transfer of property from 
an individual to (or in trust for the benefit of)--
        (1) a spouse, or
        (2) a former spouse, but only if the transfer is incident to the 
    divorce.

(b) Transfer treated as gift; transferee has transferor's basis

    In the case of any transfer of property described in subsection 
(a)--
        (1) for purposes of this subtitle, the property shall be treated 
    as acquired by the transferee by gift, and
        (2) the basis of the transferee in the property shall be the 
    adjusted basis of the transferor.

(c) Incident to divorce

    For purposes of subsection (a)(2), a transfer of property is 
incident to the divorce if such transfer--
        (1) occurs within 1 year after the date on which the marriage 
    ceases, or
        (2) is related to the cessation of the marriage.

(d) Special rule where spouse is nonresident alien

    Subsection (a) shall not apply if the spouse (or former spouse) of 
the individual making the transfer is a nonresident alien.

(e) Transfers in trust where liability exceeds basis

    Subsection (a) shall not apply to the transfer of property in trust 
to the extent that--
        (1) the sum of the amount of the liabilities assumed, plus the 
    amount of the liabilities to which the property is subject, exceeds
        (2) the total of the adjusted basis of the property transferred.

Proper adjustment shall be made under subsection (b) in the basis of the 
transferee in such property to take into account gain recognized by 
reason of the preceding sentence.

(Added Pub. L. 98-369, div. A, title IV, Sec. 421(a), July 18, 1984, 98 
Stat. 793; amended Pub. L. 99-514, title XVIII, Sec. 1842(b), Oct. 22, 
1986, 100 Stat. 2853; Pub. L. 100-647, title I, Sec. 1018(l)(3), Nov. 
10, 1988, 102 Stat. 3584.)


                               Amendments

    1988--Subsec. (d). Pub. L. 100-647 substituted ``Subsection (a)'' 
for ``Paragraph (1) of subsection (a)'' and ``the spouse (or former 
spouse)'' for ``the spouse''.
    1986--Subsec. (e). Pub. L. 99-514 added subsec. (e).


                    Effective Date of 1988 Amendment

    Section 1018(l)(3) of Pub. L. 100-647 provided that the amendment 
made by that section is effective with respect to transfers after June 
21, 1988.


                    Effective Date of 1986 Amendment

    Amendment by Pub. L. 99-514 effective, except as otherwise provided, 
as if included in the provisions of the Tax Reform Act of 1984, Pub. L. 
98-369, div. A, to which such amendment relates, see section 1881 of 
Pub. L. 99-514, set out as a note under section 48 of this title.


                             Effective Date

    Section 421(d) of Pub. L. 98-369 provided that:
    ``(1) In general.--Except as otherwise provided in this subsection, 
the amendments made by this section [enacting this section and amending 
sections 47, 72, 101, 453, 453B, 1001, 1015, and 1239 of this title] 
shall apply to transfers after the date of the enactment of this Act 
[July 18, 1984] in taxable years ending after such date.
    ``(2) Election to have amendments apply to transfers after 1983.--If 
both spouses or former spouses make an election under this paragraph, 
the amendments made by this section shall apply to all transfers made by 
such spouses (or former spouses) after December 31, 1983.
    ``(3) Exception for transfers pursuant to existing decrees.--Except 
in the case of an election under paragraph (2), the amendments made by 
this section shall not apply to transfers under any instrument in effect 
on or before the date of the enactment of this Act unless both spouses 
(or former spouses) elect to have such amendments apply to transfers 
under such instrument.
    ``(4) Election.--Any election under paragraph (2) or (3) shall be 
made in such manner, at such time, and subject to such conditions, as 
the Secretary of the Treasury or his delegate may by regulations 
prescribe.''


           Plan Amendments Not Required Until January 1, 1989

    For provisions directing that if any amendments made by subtitle A 
or subtitle C of title XI [Secs. 1101-1147 and 1171-1177] or title XVIII 
[Secs. 1800-1899A] of Pub. L. 99-514 require an amendment to any plan, 
such plan amendment shall not be required to be made before the first 
plan year beginning on or after Jan. 1, 1989, see section 1140 of Pub. 
L. 99-514, as amended, set out as a note under section 401 of this 
title.

                  Section Referred to in Other Sections

    This section is referred to in sections 50, 72, 121, 143, 267, 382, 
424, 453B, 1001, 1015 of this title.
