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Tax Consequences of Property Settlement

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unregistered posted July 12, 2000 07:31 AM
My husband and I are in Washington State and are getting divorced. We own 25% of a business; when we purchased the stock, the majority stockholder gave us a loan for the purchase of our shares, and the loan is not yet completely paid. Since this is a community property state, my husband will buy my 12.5% of the business when we agree to a purchase price (value of the stock, minus my share of what is left of the loan amount). When I receive this settlement money, how should it be treated for income tax purposes? Is it ordinary income? Is it a capital gain? If he makes payments to me over a period of years, is it treated as an installment sale? Or is it just a plain, ordinary property settlement that isn't taxable?

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