Practice Area · Financial Complexity
Tax strategy in divorce.
Every asset in a marital estate carries an embedded tax future, and most settlements are negotiated as if it didn't exist. I hold an LL.M. in Taxation from Georgetown, and I negotiate the number that actually matters: the after-tax one.
The After-Tax Test
Two equal columns that aren't.
Picture a settlement spreadsheet with two columns of equal totals. One column holds cash and the house; the other holds a retirement account and low-basis stock. On paper the division is even. After tax, pre-tax retirement dollars are worth roughly a quarter to a third less than cash when withdrawn, and appreciated stock carries a capital-gains bill the cash never will — the columns can differ by six figures while looking identical. Running every proposed division through an after-tax model isn't sophistication for its own sake; it's the only honest way to compare offers.
Transfers Between Spouses
The § 1041 rules — and the trap inside them.
Under Internal Revenue Code § 1041, transfers of property between spouses incident to divorce are generally nonrecognition events — no gain or loss at the moment of transfer. That sounds like mercy. The trap: the receiving spouse generally takes the property with carryover basis, inheriting the built-in gain and the tax bill that comes due on a later sale. A $500,000 brokerage account with a $100,000 basis is not a $500,000 asset — and the spouse who understands that negotiates differently than the one who doesn't.
Maintenance After the TCJA
Support changed character in 2019 — strategy has to follow.
For divorces after 2018, spousal maintenance is neither deductible by the payor nor taxable income to the recipient for federal purposes — a reversal of decades of practice, and the reason Colorado's advisory maintenance formula builds in a percentage adjustment (80% or 75% of the calculated amount, by income level) to account for the lost deduction. The planning follows from the rule: in the right cases, dividing income-producing property or structuring buyouts can accomplish what deductible alimony used to, at a better combined tax cost.
Retirement & the QDRO Exceptions
Three currencies, and one narrow escape hatch.
Retirement assets come in three tax currencies — pre-tax, Roth, and taxable — and equalizing them dollar-for-dollar mistakes the exchange rate. Division itself is tax-safe when done right: transfers under a qualified domestic relations order are not taxable events, and a distribution taken by an alternate-payee spouse directly from a qualified plan under a QDRO is exempt from the 10% early-withdrawal penalty — one of the few moments in life the penalty politely steps aside. IRAs follow different transfer mechanics than 401(k)s, and getting the paperwork wrong converts a tax-free division into ordinary income.
The Year of Divorce
Filing status, the house, and the details that expire.
Federal filing status is fixed by marital status on December 31 — a divorce final on the 30th makes both spouses unmarried filers for the entire year, which can move real money in either direction and is worth timing deliberately when possible. The family home carries its own clock: the § 121 exclusion shelters up to $250,000 of gain per qualifying owner — up to $500,000 for spouses meeting the use tests — and how long one spouse stays after the decree affects who can still claim it. Dependency credits, estimated payments, and basis records round out a year-of-divorce checklist I run with your CPA — the same forensic and tax professionals my cases keep busy.
The rest of this chapter.
Closely held businesses, professional practices, executive and equity compensation, trusts, real estate, and the tracing that decides what is marital and what is not.
- Business Valuationthe number that decides the case→
- High-Asset Divorcecomplex estates, disclosure, and the five-year rule→
- Business Owner Divorcekeeping the company you built→
- Complex Financial Divorcevalue, characterize, tax-effect — then divide→
- Property Divisionequitable, not automatic 50/50→
- Separate Propertya records-management discipline→
- Spousal Maintenancethe formula, published with a worked example→
- Executive Compensationproperty or income — the line worth arguing→
- Stock Options & RSUstax character changes real value→
- Trust Intereststhe instrument, not the balance, decides→
- Real Estatevalue, equity, and after-tax proceeds differ→
- Retirement AssetsQDROs, and three different currencies→
- Professional Practicesgoodwill, licensure, and buyouts→
- Tax Strategythe settlement that matters is the after-tax oneYou are here
- Hidden Assets & Forensic Discoverythe disclosure duty, and the five-year hammer→
- Cryptocurrency & Digital Assetsfindable, valuable, divisible→
- Married to the Business Ownerleveling the information field→
- Income Determinationwhat “income” means when you own the company→
Engagement
The settlement that matters is the after-tax one. Let's negotiate that number.
A consultation is a scheduled working session — in person in Greenwood Village or by video — in which we go through your situation and I tell you what I would do. It is a paid meeting, not a free call and not a sales pitch; my assistant quotes the consultation fee when you schedule. There is no chatbot here: the contact form and the phone both reach my office, my assistant reviews every inquiry personally, and the meeting goes on my calendar. Please hold the confidential details until we have run a conflicts check.