North Carolina Divorce Lawyers Blog

Articles Posted in CPAVille

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By: Dana M. Horlick, Attorney, Woodruff Family Law Group
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McBride v. Comm’r, T.C. Memo. 2015-6, 2015 WL 393011 (2015)

(a) Facts: The taxpayer, his grown son and daughter, and his daughter’s child all lived in the same household. On her federal tax return, the daughter claimed an exemption for her child. On his federal tax return, the taxpayer claimed dependency exemptions for the son, the daughter, and her child. The IRS disallowed all three of the taxpayer’s exemption, and assessed a deficiency. Continue reading →

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By: Dana M. Horlick, Attorney, Woodruff Family Law Group
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VanderKam v. VanderKam, 776 F.3d 883 (D.C. Cir. 2015)

(a) Facts: Before the parties were divorced, the wife was the death beneficiary of the husband’s retirement plan. The parties were divorced in Texas. Their divorce decree was silent on survivor benefits, but awarded the husband all rights existing because of his employment. Continue reading →

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By: Dana M. Horlick, Attorney, Woodruff Family Law Group
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Yale-New Haven v. Nicholls, 788 F.3d 79 (2d Cir. 2015)

(a) Facts: A husband and wife were divorced in Connecticut in 2008. The divorce decree incorporated a settlement agreement, which provided that the husband would transfer to the wife half of the marital share of his retirement benefits. No QDRO was entered to enforce this language, and the husband did not make the required transfer to the wife. Continue reading →

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By: Dana M. Horlick, Attorney, Woodruff Family Law Group
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Hughes v. Comm’r, T.C. Memo. 2015-89, 2015 WL 2180505 (2015)

(a) Facts: A husband owned stock in a consulting business that was growing in value. He was afraid that if he retained the stock, his former wife would seek to reopen their divorce decree. He therefore gave the stock to his present wife. Continue reading →

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By: Dana M. Horlick, Attorney, Woodruff Family Law Group
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Muniz v. Comm’r, T.C. Memo. 2015-125, 2015 WL 4126356 (2015)

(a) Facts: A Florida separation agreement provided that the husband would pay wife $1,000 per month in alimony. The husband did not pay on time, and the court entered an enforcement order directing the husband to pay $6,000 in alimony due under the agreement. The husband paid this amount. Continue reading →

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Milbourne v. Comm’r, T.C. Memo. 2015-13, 2015 WL 393040 (2015)

(a)  Facts: A husband and his wife separated. She proposed a separation agreement, which required him to pay $6,000 per month in alimony. The husband refused to sign this agreement, as he did not want to pay more than $2,500 per month in alimony.

The parties could not agree upon an amount of support and no agreement was initially signed. While the parties were negotiating, the husband paid the wife $36,000 in monthly payments of varying amounts, usually $2,000 but sometimes $4,000 or $5,000. After a total $36,000 had been paid, the parties signed an agreement calling for support of $4,500 per month, with certain possible future reductions.

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Iglicki v. Comm’r, T.C. Memo. 2015-80, 2015 WL 1886010 (2015)

(a)  Facts: A Maryland separation agreement required a husband to pay $735 per month in child support to a wife. If the husband defaulted on child support, he would immediately become liable for $1,000 per month in spousal support. Liability would continue until the wife died, the husband died, or the husband made 36 payments. The agreement was incorporated into a Maryland divorce decree.

The husband defaulted on child support and thereby became liable for spousal support. The husband’s wages were eventually garnished by a Colorado court. He took an alimony deduction for the total amount paid. The IRS disallowed the alimony deduction and assessed a deficiency Continue reading →

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North Carolina General Statutes Section 50-20(b) (4) defines divisible property. Divisible property covers certain values created post-separation.

A husband that continued to work in a dental practice post-separation did not create active appreciation.   Husband did not change anything about his business methods to increase business. The growth between the date of separation and the date of trial is presumptively divisible, and husband did not rebut the presumption. The increase in the dental practice was passive and was therefore not divisible property.  Romulus v. Romulus, 215 N.C. App. 495, 715 S.E.2d 308 (2011).

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Watch out for those hurried, last minute North Carolina agreements that link alimony and child support termination; you could get an unintended tax consequence and the loss of the tax deduction.

While the Johnson case, discussed herein, is not a North Carolina case, it could be.  Guys and gals, you simply cannot link alimony reductions to a child-related event.  It doesn’t work; that is, if you want the deduction.

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It is tempting to lump child support and post separation support/alimony into a bucket of one dollar amount, sometimes referred to as “family support”.  This is particularly tempting in the early part of a case, but it is DANGEROUS.  A couple of tax rules will help:

Rule 1:  Don’t create family support as a way to get 100 percent of support as an alimony deduction as this really doesn’t work.

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