Spouses who own businesses can often keep a tight lid on finances. This may not be an issue at the onset of marriage, but it means that often, the other spouse is clueless as to how the money is being made. In the unfortunate event of divorce, income becomes a bigger issue when litigating over support and property division. This post is to serve as a primer for two common business entities you may encounter in North Carolina: the C corporation (C corp) and the S corporation (S corp). Continue reading →
The American Rescue Plan Act of 2021 (hereinafter “Plan”), also called the COVID-19 Stimulus Package, was passed by Congress and officially signed into law by President Joe Biden on March 11, 2021. The Plan seeks to aid the economy in recovering from the effects of the COVID-19 pandemic. One significant change the Plan provides for is a new federal enhanced child tax credit beginning July 15, 2021. Statistics show that the credit will go to roughly 39 million households with about 65 million children. For the 2021 tax year, the enhanced maximum child tax credit is $3,600 for children younger than age six (6) and $3,000 for children between the ages of six (6) and seventeen (17).
Henry v. Comm’r, T.C. Memo. 201924, 2019 WL 1385242 (2019)
(a) Facts: Husband and wife married in 1997 and divorced in 2013. While the divorce case was pending, the parties filed a joint income tax return for tax year 2012. The return did not report $14,650 in income earned by the husband from his second job as a church musician.
The IRS assessed a deficiency, which neither party contested. The IRS then seized funds from the wife’s 2014 tax return to satisfy the deficiency. The wife moved for innocent spouse relief. The IRS granted relief but denied the wife a refund. The wife sought review in the Tax Court.
Schorse v. Comm’r, T.C. Memo. 2018176, 2018 WL 5270556 (2018)
(a) Facts: Husband was a computer programmer and wife was a physician. During the marriage, the wife earned 80% to 90% of the parties’ income.
Continue reading →
Welwood v. Comm’r, T.C. Memo. 2019113, 2019 WL 4187568 (2019)
(a) Facts: Husband and wife were married in 1973. They separated in Florida 2003 and signed an agreement dividing their property.
In the agreement, the husband conveyed to the wife a 50% interest in certain real estate partnerships. The partnerships were designed to generate tax savings in early years. A 1986 tax law change limiting the deduction of passive losses against other income made the partnerships much less attractive in their later years. Continue reading →
Neitzer v. Comm’r, T.C. Memo. 2018156, 2018 WL 4519997 (2018)
(a) Facts: Husband owned and operated two businesses. The wife, who was trained as a nurse, was totally disabled after a series of spine and hip surgeries. Her income came primarily from disability benefits.
The couple separated in 2010. Their 2012 joint tax return was prepared by the husband’s business accountant. The wife was notified of the return only two hours before she was expected to sign it. The accountant had been told to disclose nothing to the wife about the husband’s personal or business finances. The wife signed the return without reading it. Continue reading →
Asad v. Comm’r, T.C. Memo. 201780, 2017 WL 2211215 (2017), aff’d, 751 F. App’x 339 (3d Cir. 2018)
(a) Facts: A husband and wife owned rental properties. Each spouse was responsible for some of the properties. They filed joint tax returns in which they claimed losses on the properties. Continue reading →
Rogers v. Comm’r, 908 F.3d 1094 (7th Cir. 2018)
(a) Facts: Husband and wife filed a joint tax return for 2004. The IRS assessed a deficiency, and the parties sought review in the Tax Court. The Tax Court held for the IRS.
Three years later, the wife filed a petition for innocent spouse relief. The IRS rejected that petition. The wife sought review in the Tax Court, which agreed with the IRS. The wife appealed to the Seventh Circuit. Continue reading →
Ogden v. Comm’r, T.C. Memo. 201988, 2019 WL 3162423 (2019)
(a) Facts: Husband and wife were married in 1991 and divorced in 2011. The wife was granted Social Security disability benefits in 2008. She received $36,083 that year and $10,297 in 2010.
On their 2008 tax return, the parties did not report the wife’s benefits. On their 2010 return, the parties reported the benefits but did not pay the tax. Both returns were prepared by the husband. Continue reading →
Abdelhadi v. Comm’r, T.C. Memo. 2018183, 2018 WL 5609201 (2018)
(a) Facts: Husband and wife were married in 2014. Before getting married, they were romantically involved with one another and had both a daughter and a son.
The IRS received a joint tax return for tax year 2007, in which the couple clearly was not married. The wife “did not see, review, or sign that return; she has not seen it since and it is not part of the record.” 2018 WL 5609201, at *2. (To the extent that the wife’s signature appeared on the return, she presumably argued that her signature had been forged.) Continue reading →