my client is getting a divorce and will receive the primary home that she wishes to sell immediately after the divorce and the gain realized will be approximately 475k. she will also receive a check or funds in the amount of $75k from the husband's 401k. she is 56 years old and he is 61 years old.
my client wants to ensure that the property settlement agreement is written in such a way that she does not pay income tax. from what I understand the transfer of the 75k to my client is tax-free if made pursuant to a qualified domestic relations order? This is incident to divorce and is between spouses?
the primary home will be transferred in name as separate property to my client; she wants so to avoid all tax or capital gains. Can she do so, or is this an issue where the taxable portion for capital gains purposes (amounts over 250k) should be negotiated in the property settlement agreement, and if not is it advisable to sell the property prior to divorce? this was the primary home, purchased in 2017.