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 126.96.36.199
- 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 20 HIGHLIGHTS
This 20th edition of Divorce Taxation, by authors Brian C. Vertz and Mitchell E. Benson (with Aliah Molczan), covers tax- and divorce-related financial considerations critical to the practice of family law, including considerations related to: the Infrastructure Investment and Jobs Act of 2021 (“IIJA”); the American Rescue Plan Act of 2021 (“ARPA”); the Consolidated Appropriations Act of 2021 (“CAA-21”); and the Coronavirus Aid, Relief, and Economic Recovery Act (“the CARES Act”). In addition, the authors provide updates to existing IRS rulings and important tax court rulings, as well as practical and strategic advice for handling the complicated tax issues that may arise in a divorce.
The highlights include coverage and analysis of:
- The ARPA: Significantly expanded child tax credits creating a two-tier system; first-of-its-kind advance payments beginning in July, 2021; companion Restaurant Revitalization Fund and Employee Retention Credits.
- The Paycheck Protection Program (“PPP”): Factors to consider when evaluating the funds available as assets or income; and its availability and impact on taxable income.
- Donor-advised funds for family charitable giving: What happens to these accounts on the dissolution of a marriage; tax aspects of funding the account.
- Virtual (crypto) currency: Expanded coverage of this emerging form of currency, wallets, fungible tokens, IRS rulings and upcoming tax return disclosure requirements.
- Gifts during marriage: When challenged by a divorcing spouse; practical tips for discovery when trusts are present.
- Real estate: Division of real estate investments avoids a costly and complex valuation process; commercial real estate assets owned in passthrough entities may be excellent long-term investments; what to look for in evaluating the merits of ownership.
- Transfer and division issues encountered with closely held and public company stock, including: limits on trading windows; SEC regulations; tax on disposal.
New! Chapter 22: Foreign Nationals, Assets and Income. Addressing tax issues that may arise when a spouse is not a U.S. citizen or has foreign property or income sources, including: specialized tax issues related to the transfer of foreign real estate, bank accounts, investments, or multinational businesses.
Appendices: Annual updates to the appendix of tax forms, including: new! Appendix 38, IRS Form 8812, Credits For Qualifying Children And Other Dependents.
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