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(1) for purposes of this subtitle, the prop-
erty shall be treated as acquired by the trans-
feree by gift, and
(2) the basis of the transferee in the prop-
erty shall be the adjusted basis of the trans-
feror.
(c) Incident to Divorce.--For purposes of subsec-
tion (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 mar-
riage.
Temporary, but not final, regulations have been issued under
section 1041. Those temporary regulations provide that the
transferor of property under section 1041 is to recognize no gain
or loss on the transfer, regardless of whether the transfer is in
exchange for consideration. See sec. 1.1041-1T(c), Q&A-10,
Temporary Income Tax Regs., 49 Fed. Reg. 34453 (Aug. 31, 1984).
The temporary regulations under section 1041 further provide that
in all transfers subject to that section the basis of the trans-
ferred property in the hands of the transferee is the adjusted
basis of such property in the hands of the transferor immediately
before the transfer, regardless of whether the transfer is a bona
fide sale in which the transferee pays the transferor consider-
ation for the transferred property. See sec. 1.1041-1T(c), Q&A-
11, Temporary Income Tax Regs., 49 Fed. Reg. 34453 (Aug. 31,
1984).
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