To be clear, this is a question about US Federal Taxes, and I live in Virginia, which is an equitable property (not community property) state. Additionally, I understand this is not a legal forum wherein I can get legal advice. I just want the general idea, so that when I go to my lawyer and/or accountant, I have an idea of what to expect.
So, my soon-to-be ex-wife and I have an exceedingly expensive house with a lot of equity in it. As part of the divorce settlement, I am going to be bought out of my share of the equity. The question is, is this payout taxable income, or just a redistribution of my portfolio? I'm assuming that in many ways, the buyout would be treated as if I were selling the house, but the happiest answer I could receive is, "No - it's not."
So, what's the deal then - is a buyout a sale subject to capital gains, or is it just a reshuffling of assets?