Divorce and taxes


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A summary of business tax issues in marital dissolution

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Divorce and taxes

  1. 1. DIVORCE & TAXES WEBINARIRS Circular 230 Disclosure: To ensure compliance with the requirements imposed by the IRS, we inform you that any tax advice contained in this communication,including any attachment to this communication, is not intended or written to be used, and cannot be used, by any taxpayer for the purpose of (1) avoidingpenalties under the Internal Revenue Code or (2) promoting, marketing or recommending to any other person any transaction or matter addressed herein.Roger RoyseRoyse Law Firm, PC1717 Embarcadero RoadPalo Alto, CA 94303rroyse@rroyselaw.comwww.rroyselaw.comwww.rogerroyse.comSkype: roger.royse
  2. 2. 2OVERVIEW1. Transferring Assets2. Inherent TaxLiabilities3. Net Operating Loss4. Capital Loss5. Passive ActivityLoss6. S Corp. SuspendedLoss7. Attorney’s Fees
  3. 3. 3Alimony/Property Division/Child Support• Alimony taxable to recipient, deductible to payor• Child support not taxable or deductible• Property division not taxable if under 1041• Dependents
  4. 4. 4Transferring Property• Transferring Assets• Transfers incident toDivorce (IRC § 1041)• Principal ResidenceExclusion (IRC § 121)• Allocation of InherentTax Liabilities
  5. 5. 5Business Interests: Loss Carryforwards• Net Operating Loss• Capital Loss• Passive Activity Loss• S Suspended Loss• Allocation of S corpand LLC Income• Redemptions
  6. 6. 6Attorney’s Fees• General DivorceLegal Fees• Alimony-RelatedLegal Fees• Tax-Related LegalFees• Exceptions
  7. 7. 7www.rroyselaw.com