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Zero Alimony Deduction for a Split Bonus, Tax Court Says | AccountingWEB

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I do not think anybody actually likes paying income taxes, no matter what they say. True, the many benefits of taxes include things like roads, police, and even my beloved courthouses, but it is hard to part with a portion of every cent I earn.

In a divorce, child support and spousal support issues have different tax consequences.  In general, a child support payment is considered the paying party’s obligation to support his or her child, which every person in the United States has an obligation to do from their net income after paying income taxes.  Because of this, child support payments are not tax deductible, though dependent children are.

On the other hand, payment of alimony (or, in California, “spousal support”) is considered the sharing of income before the earning party has the opportunity to enjoy it.  Because spousal support is the income of the party who is receiving it, and not the obligation every parent has to help support children, the paying party has traditionally been able to claim spousal support as a tax deduction, and the receiving party must pay regular income taxes on spousal support received.

In this article, a tax court considered whether to allow a paying party to claim deductions to taxable income write off alimony payments made before a court made orders requiring the paying party to pay alimony.  The court made the following conclusions:

To qualify for a deduction, alimony must meet the following requirements:

  • The payment must be made under a “divorce or separation instrument.”
  • The instrument can’t specify terms that the payment is nondeductible and nontaxable.
  • The parties can’t be living in the same household when the payment is made.
  • The payor’s obligation to make the payment must end at the death of the recipient.

In other words, the IRS and tax courts will want a formal written order (even if agreed) that mandates the payment of spousal support before the paying party can deduct alimony payments from his or her taxable income.  Such agreements are relatively simple, and there are forms on the California Courts website that you can use, but they do not always fit what a specific couple needs.  A simple spousal support order should cost relatively little if you need to consult an attorney or a legal document preparer.

Source: Zero Alimony Deduction for a Split Bonus, Tax Court Says | AccountingWEB

Getting along after its over.

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This is an interesting article from People magazine about a couple who, after their divorce, gets together for a family picture each year for the benefit of their child.

Experience tells me this couple’s relationship is pretty unusual; however, it certainly sets an example of understanding how your relationship can influence your child’s life.

Whenever I have a person come into my office, there is typically a complaint somewhere in the mix about the behavior of the other spouse. Complaints typically relate to finances, parenting, inattentiveness, substance abuse, poor judgment, and interloping significant others. My client often wants me to get an order that will “make them” be better.

While the orders create an incentive for a party to be better, or at times rearrange parenting time or financial decisions to help protect against known problems, there is very little I can do to change the behavior of the problematic party.  More important, I try to help clients develop coping skills to deal with the other party’s habits.

This is especially so where the conflict between the parties relates to the raising of children. Often times, the differences boil down to a difference in approach or style. When that is the case, even a court will not typically issue orders, and the only thing a parent can do is learn to put up with the differences as best as he or she can.

In the long run, you will have a direct parenting relationship with your ex-husband or wife for however many more years it takes for your youngest child to turn 18 (and graduate from school), and you will continue to have ongoing dealings for other life events (graduations, marriages, grandchildren, etc.) forever. The better you can make your relationship with the other party after your divorce, the better this will make your life.

Ryan and Lidia Grassley Paid to Hold Newborn Son

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People say lawyers are unscrupulous in their billing.  A hospital bills a couple $40 for allowing them to hold their own newborn child.

“Honestly we both laughed about it,” Ryan Grassley tells PEOPLE of paying to hold his baby

Source: Ryan and Lidia Grassley Paid to Hold Newborn Son

Vacations and divorces.

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University of Washington sociologists have found what is believed to be the first quantitative evidence of a seasonal, biannual pattern of divorce filings. The researchers analyzed filings in Washington state over a 14-year period and found that filing consistently peaked in March and August, the periods following winter and summer holidays.

This is an interesting study by U-Dub, which has motivated us from our long silence to make some observations.

Our experiences are similar to those shown in the study, with some notable differences: We have seen that people come to us seasonally, with divorces coming during January and February, child custody disputes showing up about April or May, and another, smaller swell of divorces and support cases about fall.  Our observations of these seasonal phenomenon are:

  1. “I stayed for Christmas with him/her, hoping that we could make it good for the kids.  It was awful and I just can’t do it again.” This is a — slightly sanitized — summary of the statement that often accompanies our new clients in January.
  2. (a) “Our son/daughter is not doing well in school and we need to change schools for next year” (b) “I need to move for my job, and I want to get that done before school starts next year.”  These are often the explanations we get from our clients in April and May of each year before engaging in a child custody proceeding.
  3. “I was hoping that our family vacation would bring us closer together, but…” We hear something along these lines occasionally with the fall divorce.

What makes our experience different from the data studied at the University of Washington?  Possibly their weather?

Father to dozens refuses to pay child support.

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One quote from this news report is just astounding to me:

“He allegedly fathered dozens of children.”

I don’t know if he could ever earn enough money to pay realistic child support to any of these women.

 

Terry Turnage appears in court for not paying child support | WREG.com.

Judge to take second look at divorce granted to same-sex couple – The Athens Messenger: News

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Same-sex marriage is a fact in California.  If you are married here, you can get a divorce here whether married to a person of the same or of the opposite sex.

Interesting conflicts of law arise when people marry in one state and divorce in another.  Legal truths that we all presume in California change significantly when you move to another state before seeking a divorce.  For example, if you purchase a community property home in California before leaving the state and seeking a divorce in a non-community property state, the means and calculations used to divide the spouses’ relative ownership interests in that property may change drastically.

This case has been pending a long time in Ohi0.  A same-sex couple married in California, but then apparently took up residence in Ohio, where one of the two sought a divorce.  The courts there are now caught in a dilemma: if the state hosting the divorce proceedings does not recognize same-sex marriage at the time of the divorce, does that state have an obligation to recognize the marriage (legal in California) under the “full faith and credit” clause?

The judge on this case is taking a second look.

Judge to take second look at divorce granted to same-sex couple – The Athens Messenger: News.

Art, Collections, and Community Property

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I have kids.  Young ones. They exemplify the term, “This is why we can’t have nice things.”  Our art is mostly made by them, or from a local housewares store.

In my career, I have run across several couples with collections of valuable fine art.  Every time, the fine art collection has posed a problem in the division of property.  Here are some examples of the real arguments I have heard about art and other collections:

  • “My parents bought that painting for me as a wedding gift.”
  • “I have always had a deep emotional attachment to that sculpture.”
  • “I was the one who collected all of those fine china plates from around the world.”
  • “I worked in the gallery that sold this artist, and I bought that painting  from the artist himself using my employee discount.”
  • “If it wasn’t for me, she wouldn’t even have known which Matchbox cars to collect.”
  • “He he gave me that AR-15 for my birthday.”

There are two problems with any collection of valuable items, including art, while you are dividing them in a divorce:

  1. They have actual cash value as a collection, and individually.
  2. They form a part of the emotional history of the relationship.

The simple advice in this article from the Wall Street Journal is excellent, but only really works if at least one party comes to terms with the second of these two issues: the emotional attachment to the art or collection.  The toughest part often is in finding an appraiser who can place a reliable value on the collection.  The internet is a great resource to find appraisers for just about any collection.

When you are dividing items from the household, emotional distance is key.  The more intrinsic value you place in an object, the more power you give to the other side.  Find your Zen, find an appraiser, and divide your community property.

Tips for Dividing Art in a Divorce or Death – WSJ.

5 Divorce Facts That Might Change Your Idea of Splitting Up | World of Psychology

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People ask me about divorce statistics all the time.  This article provides most of the answers you could ever need.

5 Divorce Facts That Might Change Your Idea of Splitting Up | World of Psychology.

 

Too young to consent, but old enough to pay.

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I will occasionally post stories like these, which show the upside-down logic of family court.

In this case, a 14 year old boy had sex with a 20 year old woman.  Under Arizona law, the boy was too young to consent to the sexual encounter, making him a victim of statutory rape.

The relationship produced a child, but the boy did not know this fact.

The boy grew up, trained for a career, and started his own life.  He did not find out about the child until eight years later, when the state started proceedings against him for child support.

Arizona statutory rape victim forced to pay child support.

Deployed submariner loses a round in custody battle | Navy Times | navytimes.com

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Deployed submariner loses a round in custody battle | Navy Times | navytimes.com.

I have been tracking this case since it started.  The father is a submariner in the US Navy.  That means one or two times a year, he will get into a submarine and disappear for months at a time. He does not see or speak to his family during that time.  It is rough life.  I am glad he is willing to do this job.

He has a daughter from his first wife, and he is remarried.  During the divorce his first wife was convicted of assaulting the daughter.  The courts gave sole legal and physical custody to the father.  He moved to the Seattle area with his daughter and wife.

Last year, the ex-wife asked the court to award her custody of the daughter. The court then started making orders that appear to violate the Servicemembers Civil Relief Act.  One order threatened this deployed submariner and father with sanctions for his failure to appear at a hearing.  Think about this: while deployed, submariners are functionally gone from planet Earth.

Even now, the family court seems to be ignoring the Servicemembers Civil Relief Act.  The father is still deployed on a submarine, and yet the court is entering orders modifying child custody.

I have encountered judges in my own practice who make light of the SCRA.  Since then, I have seen a larger emphasis placed upon the relief the SCRA offers, but this news article is not the only case of a parent taking advantage of the deployed status of a service member.  It is my hope the pending legislation aimed at preventing this kind of result in the future.