Federal tax law generally treats transfers of property incident to divorce as non-taxable, meaning no immediate gain or loss is recognized at the time of transfer. However, the receiving spouse takes a carryover basis, which can create capital gains later if the asset is sold. This makes accurate basis records for land, equipment, water rights, and livestock critical during negotiations. Coordinate with your tax adviser on timing, structure, and documentation to avoid unintended tax outcomes. You should also consider depreciation recapture and how to handle joint farm accounts or entities in your settlement language. IRS guidance and Treasury regulations explain these rules and their practical effects. Additionally, Littman Family Law provides mediation and litigation support to resolve disputes effectively and protect clients’ financial interests, Contact us for more information about your case.