Hotchpot

In civil and property law, hotchpot (sometimes referred to as hotchpotch or the hotchpotch rule) is the blending, combining or offsetting of property (typically gifts) to ensure equality of a later division of property.
The name hotch-pot is taken from a kind of pudding, and is derived from the French word "hocher", or "shake." It was used as early as 1292 as a legal term, and from the 15th century in cooking for a sort of broth with many ingredients (see Hodge-Podge soup), and so it is used figuratively for any heterogeneous mixture.
Use.
It commonly arises in cases of divorce financial proceedings often in the guise of other names and general principles used.
Hotchpot remains of occasional use in a dwindling range of jurisdictions worldwide to divide up a deceased person's estate subsequent to gift(s) which the local law considers:
By jurisdiction.
Scotland.
The principle exists in the law of Scotland in cases of succession and is known as "collatio inter liberos".
South Africa.
Hotchpot exists in South Africa also with respect to succession under the name "collation".
Canada.
In Canada the presumption of advancement is applied such that in most Canadian provinces, the receipt of property or land that would otherwise be disposed by will, by a beneficiary in advance, of that will, may be part or all of their entitlement under the will. Most provinces explicitly do not require the return of the advancement, and provide for its valuation as of the time of receipt not death. As with the original "pain of being excluded from the distribution", a refusal to provide such valuation could be a rationale for exclusion from receiving new property.
For instance, in Nova Scotia, "if a child or grandchild of a person who has died wholly intestate has been advanced by the intestate by portion, the portion shall be reckoned... as part of the estate of the intestate distributable according to law" and valued as of the time of receipt not death."
United States.
Estate Law.
Certain state laws refer to hotchpot in describing the laws of intestate succession (i.e. succession without a will). See, for example, Virginia Code § 64.2-206. Advancements brought into hotchpot.
Internal Revenue Code.
Hotchpot is slang for the blended group of Section 1231 "Gains and Losses" of the U.S. tax code. According to the code, a section 1231 gain is:
A section 1231 loss is any loss that occurs under the same circumstances required for a section 1231 gain. Under this definition, the term “property used in the trade or business” is subject to the limitations of Section 1231(b) of the Internal Revenue Code. Additionally, A capital asset is property held by the taxpayer, whether or not that property is connected with his trade or business, but not that which falls into the eight categories set forth in Section 1221(a). Those eight sections are:
Hotchpot gains and losses are given preferential status by Section 1231 of the code, a taxpayer-friendly policy that dates back to the World War II era. This preferential status allows hotchpot gains and losses to be treated as long-term capital gains and losses when the gains "are greater than" the losses (thereby treating the net gain at a more favorable tax rate), and allows them to be treated as ordinary income and ordinary losses when the gains are "less than or equal to" the losses (thereby allowing the losses to cancel out the income) (Id. at 522.) Under the code, long-term capital gains are gains from the sale or exchange of a capital asset held for more than one year, if and to the extent that such gain is considered when computing gross income. Long-term capital losses are those from the sale or exchange of a capital asset held for more than one year, if and to the extent that such losses are considered in computing taxable income.
While the average taxpayer may have no need to identify "1231 gains and losses" as "Hotchpot gains and losses," that taxpayer likely benefits from the preferential tax treatment.
In addition, section 1231(a)(4)(C) contains a special rule for the purposes of determining whether a § 1231 gain or § 1231 loss enters the hotchpot. This subsection states that if recognized losses from an involuntary conversion as a result of casualty or from theft, of any property used in the trade or business or of any capital asset held for more than one year, exceed the recognized gains from an involuntary conversion of any such property as a result of casualty or from theft, such losses and gains do not enter the hotchpot. Thus, section 1231 does not apply to gains and losses resulting from casualties and thefts if the losses exceed the gains. The practical effect of this subsection is that net losses from such involuntary conversions will be treated as ordinary income (abolished by s1(2) Law Reform (Succession) Act 1995 in intestacy cases from 1 January 1996).
England and Wales.
In English law, Hotch-pot or hotch-potch was the name given to a rule of equity whereby a person, interested along with others in a common fund, and having already received something from the same interest, is required to offset what has been so acquired when his share of the common fund is considered, on pain of being excluded from the common fund distribution. The principle equated to "collatio bonorum" under Roman law: emancipated children, to share any final inheritance afforded by their freed forebear shared equally with unemancipated siblings, were required to bring their inherited property from that person into the equation. In England and Wales hotchpot was abolished for persons dying intestate from and including the first day of 1996, by section 1(2) of the Law Reform (Succession) Act 1995. The word would likely be shunned in the updated language divorce proceedings, which typically apply similar principles to recent large inter-marital gifts (i.e. between husband and wife). The word hodge-podge colloquially is not slang but rather a synonym for a jumble or mishmash.