I have been told that there is a possiblity that it would not be taxed. Retirement plan assets are not taxed when they are distributed to another person IF you have a Qualified Domestic Relations Order in place. This is an order from the state court that meets certain requirements set out in federal tax law. Commuting expenses TO work are not dedictible. Legal fees for bankruptcy are not normally a deduction.
Tax advice can be deductible within certain limits.
I had been seperated from my spouse for about a month. To lessen the problems later in the divorce, I withdrew my retirement and split the amount I received. Taxes were paid on the retirement moneys, but since I had to divide the amount by Federal Law, I assumed there would not be a penalty. The divorce was finalized in August 1999. It is now March of 2001, and the IRS is saying I owe the penalty.