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generally is equal to the taxpayer’s cost of the property,
adjusted as required under section 1016. The basis of community
property transferred pursuant to a divorce depends upon the
nature of the property division.5 If the division is a
nontaxable one, e.g., an equal division of strictly community
property, the transferee spouse receives each asset with a basis
equal to its basis to the community prior to division. See
Carrieres v. Commissioner, 64 T.C. 959, 964-965 (1975), affd. 552
F.2d 1350 (9th Cir. 1977). A taxable division causes different
results. A taxable division occurs either from an unequal
division or from an exchange of separate property for virtually
all of the other spouse’s community property in an otherwise
equal division. In these situations, where the transferee spouse
receives a whole asset, she receives it with a basis equal to
one-half the basis prior to division plus one-half the fair
market value of the property. See id. This is so because one-
half of the property is deemed to have been sold by the
transferor spouse to the transferee spouse at fair market value.
The transferee spouse keeps her original basis in her one-half
interest while receiving a cost basis for her spouse’s one-half
5Sec. 1041 is not applicable in this case because the
transfer of Mr. Anthony’s interest in the Compton residence
occurred prior to July 18, 1984, and nothing in the record
indicates petitioner and Mr. Anthony elected to have sec. 1041
apply to the post-1983 transfer. See Deficit Reduction Act of
1984, Pub. L. 98-369, sec. 421, 98 Stat. 793.
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