Question: When my husband and I decided to call it quits, he hired the CPA who had advised us and filed our personal and corporate tax returns for the past ten years to help him in our divorce case
Question: When my husband and I decided to call it quits, he hired the CPA who had advised us and filed our personal and corporate tax returns for the past ten years to help him in our divorce case. This CPA is now valuing our business, tracing the purchase of assets, and giving tax-related opinions in court – most of which are very detrimental to me. Throughout the years, I have had many conversations with this CPA and have delivered personal information to his office about my inheritance and gifts from my family, but he refuses to make any information available to my lawyer without a court order or subpoena – even though I gave him the only copies I had. This does not seem right to me. How can a professional who worked for both of us choose sides and what can I do?
Answer: In our view, a certified public accountant who has prepared joint income tax returns for and given advice to a married couple has a serious problem choosing sides at divorce and becoming adversarial to one of his clients. As a client, you are entitled to not only the returns and all schedules, but also all work papers, notes, and every piece of information in that CPA's files.
In court, financial experts can be attacked on cross examination in four areas: qualifications, independence, the assumptions used, and subjective judgments. Here, it appears that if this CPA testifies or gives affidavits, his lack of independence will surely taint his opinions in the eyes of the court. We believe that he should be given one last opportunity to remove himself from participating in your case. If he refuses, we suggest that your attorney seek an order from the court requiring the CPA to turn over all of the records and disqualifying him from participation in the case. If he persists, we believe he is leaving himself open to a lawsuit.
Question: My husband's former wife, who moved to another state after their divorce, calls me constantly, cursing and berating me and threatening to do harm to me. I receive "hang-up" calls at all hours of the night. I have been to local law enforcement and although my state has a law against harassing and threatening telephone calls, since this woman lives in another state, law enforcement tells me that nothing can be done. Is this true?
Answer: No. Federal law prohibits obscene or harassing or threatening telephone calls that are made in interstate or foreign communications. Under this law, it is illegal for a person to use the telephone (a) to make obscene, indecent, or lewd comments; (b) to annoy, abuse, threaten, or harass a person whether there is conversation or not; and (c) to cause another person's telephone to repeatedly or continuously ring. The penalties can be a fine of up to $50,000, six months in prison, or both. We suggest that you contact the Federal Bureau of Investigation or United States Attorney in your area and seek enforcement of your rights under this federal law.
Question: My wife and I are completing a settlement which includes alimony and child support. I am willing to pay her more money during the first several years when she will need it most in consideration of paying lesser amounts after she gets on her feet. Try as I might, I can't understand why we can't do what we want to do and still keep the payments deductible. Isn't there a simple explanation that can satisfy my basic need for information?
Answer: Unfortunately, nothing is "simple" when it comes to the taxation aspects of marital settlements. Assuming they qualify under the tax law, alimony payments are deductible by the payor in the year paid and includible in the income of the recipient in the year received. Child support payments, on the other hand, are neither deductible nor includible.
To qualify as alimony, each of the following requirements must be met: (1) Payments must be made according to a divorce decree or separation agreement signed by the husband and wife; (2) Payments must be in cash; (3) Payments must terminate at the death of the recipient; (4) Husband and Wife can't file joint income tax returns with each other; (5) Generally, Husband and Wife must live separate and apart; (6) Payments can't be designated as "child support" or as not being alimony; and (7) Payments may not be made from alimony trusts.
Regardless of the reasoning behind you wanting to make larger payments during the first few years, there are rules that prevent what is known as "front end loading" -- that is, where, as you have described, the payor makes larger payments during the first few years after the separation or divorce -- which increases the deduction -- and then decreases or terminates the payments.
In these situations, a part of the large payment in the early years may later be treated as property settlement which is not deductible by the payor and is not taxable to the recipient. This means that if you deducted -- and your wife reported -- the large payments, you might be required to "recapture" previously deducted amounts into your income and pay additional taxes. At the same time, your former spouse would receive a refund. Since this result is certainly not what you intended, we suggest that you "leave the driving" to an experienced matrimonial lawyer and certified public accountant who can make sure your intentions are carried out.
Jan Collins Stucker is an award-winning writer and editor. Jan Warner is a matrimonial, elder law, and tax attorney. Both are based in Columbia, South Carolina. Flying Solo is distributed nationally by Knight-Ridder/Tribune Service.
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