Divorce Taxation

Description

Take the Work Out of Divorce Tax Planning

Whether you are structuring agreements, advising clients, negotiating with adversaries, or presenting to the court, it is important to have a clear understanding of the tax consequences. However, lack of funds or time to hire a tax expert sometimes leaves you wandering alone through this complicated area. Now there’s a roadmap.

This plain English manual walks you step-by-step through the most commonly arising trouble spots in property distribution, support, and more. This answer book is intelligently organized and indexed, well-supported with citations, and most important, loaded with practical advice. Divorce Taxation will help you sidestep problems in these areas:

• Property aspects of dissolution
• Alimony and separate maintenance payments
• Temporary support payments
• Child support
• The dependency exemption and child tax credit
• Medical expenses for dependents
• Deductibility of attorney’s fees
• The kiddie tax
• Joint returns
• Innocent spouse election and equitable relief
• Retirement benefits, QDROs and IRAs
• Stock options

Complicated rules can slow down your progress as you work your way through the taxation pitfalls and opportunities that abound in divorces. Divorce Taxation quickly guides you through trouble spots and alerts you to potential tax savings in property distribution, support, and more. It offers on-target explanations, examples, specimen clauses, forms, checklists, tables, and other practical planning tools—all designed to reduce the work in divorce tax planning. This problem-solving book is loaded with how-to gems like:

• How to structure make-up alimony payments to side-step income recapture. Section 3.9.2.2
• How to transfer an IRA tax-free. Section 14.8
• How to avoid non-deductible child support treatment. Section 3.8.2
• How to qualify alimony as taxable and deductible. Section 3.5
• How to bypass tax on interest payments. Section 2.4.2
• How to enforce the record requirements of property transfers. Section 2.1.4
• How to shift the dependency exemption and the child tax credit to the non-custodial parent. Section 5.1.5
• How to deduct a portion of the attorney’s fees. Section 7.5

The book includes appendices with proposed orders and forms, clauses to achieve Lester results, and the Temporary Regulations which are still in force.

REVISION 21 HIGHLIGHTS

This 21st edition of Divorce Taxation updates the governing law and offers practical and strategic advice for handling the complicated tax issues that may arise in a divorce. The highlights include coverage of:

Property Transfers & Distribution of Assets and Liabilities:

• Practical tips for dividing interest-bearing securities (bonds) in a divorce
• Virtual currency: how losses are reported; full disclosure of assets during equitable dissolution proceedings; valuation and tracing of NFT’s and cryptocurrency
• Gig economy tax reporting
• State income tax issues when divorcing spouses live and work in different states

Tax Aspects of Valuation and Net Income

• Determining and valuing reasonable compensation
• Deciphering individual income tax and business tax returns
• Employee retention credits and marital settlement agreements

Kiddie Tax

• Responsibility for filing
• Sample language to include in a marital settlement agreement to cover payment of the tax on the child’s unearned income; increasing child support or alimony for this purpose; and the cost of preparing the child’s return

Tax Filing Status

• Impact of separation agreement on filing status
• Advantages of filing jointly, specifically re: income thresholds for IRA contributions
• Practical considerations re filing status for older couples dealing with medical expenses

Relief From Joint and Several Liability (Innocent Spouse Relief):

• Not available for payroll tax non-payment penalties (i.e., trust fund penalties)

Retirement Benefits and Accounts: Impact of SECURE Act 2.0.

Interest, Penalties, Tax Crimes & Offshore Accounts

• Estimated tax payments: penalties for failure to pay; divorced spouses cannot pay jointly
• FBAR penalties: what is a violation; when does violation occur (per form or account)?

Updates to the Appendix of tax forms

AND MORE!