Tax Issue in the First Wives Club

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The film is a comedy about three women seeking justice after their husbands became successful and divorced them for younger women. Brenda, Elise, Cynthia and Annie were close friends in college, but after graduation from Middlebury, they lost touch with one another for 27 years. When Cynthia committed suicide after her ex-husband married a much younger mistress, the other three women met at her funeral for the first time since college. Seeing that their friend grew unhappy after her husband left her for a younger woman, they found themselves in the similar situation. Brenda is now divorced, depressed, and struggling financially. She helped her husband Morton open a profitable chain of discount electronics stores, but now that his business has made him a minor celebrity, he has taken up with a much younger woman named Shelly. Elise, a movie actress whose husband also left her for a younger woman, has now become reliant on plastic surgery to keep her career afloat. Her husband, Bill, is demanding a divorce and half of her fortune. Annie, meanwhile, is separated, suffering extreme self-esteem issues, and going through a therapy with her husband Aaron. Shortly after Cynthia's funeral, Annie's husband asks her for a divorce to leave her for the therapist. After talking to each other and getting angry about their situations, Brenda, Elise, and Annie decide to put together a plan that would eventually give them control of their ex-husband's businesses and allow them to do whatever they want with the money they helped earn. Thus, the three women created The First Wives Club. There are several tax issues in this movie. The first one is related to the Bvlgari pearl necklaces that Cynthia gave her three friends as graduation gifts. A gift is defined as “a transfer of property from a donor to a donee that is not a profit-motivated arm’s length transaction”. Neither the donor nor the donee recognizes any income or pays income tax on the transfer of gift. In this situation,...
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