Can a divorce judge deny IRS approved write offs in a corporate tax return

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Can a divorce judge deny IRS approved write offs in a corporate tax return

If the husband owns a landscape company that
is incorporated as a S Corp. can a divorce
judge deny write offs for equipment and
vehicles that were purchased by the company?

The right off/purchases were bought by the
company and were used as a right off that was
approved by the IRS. I would think that the
company is a separate entity that a judge
should not be able to rule on even though it
would effect the bottom line of the husbands
income and ultimately effect his average
income for support and maintenance here in
NY.

Asked on April 10, 2019 under Family Law, New York

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 2 years ago | Contributor

Tax law is not the same as determining what is a person's (or business's) assets for purposes of distribution in a divorce. There are many "paper" write-offs and deductions that do not in fact affect the real value (what someone would pay for) an asset, for example. For purposes of the divorce, what matters is the actual value, not the tax value, since if they were to sold or liquidated, they would bring in the actual value, not what they are considered to be worth for tax purposes.
And if the company is a sole owner S-corp, because the husband has 100% control over the company and its assets, it is, for this purpose, appropriate to treat it and its assets as assets of the husband. Having 100% control, he can pay himself from the company, take distributions from it, decide to sell its assets, etc.: it is as much his for divorce purposes as if it was a sole proprietorship. Family/divorce law does not let a spouse "hide" assets from his/her spouse by having them in a separate entity which nonethelss is 100% controlled by him or her.


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