- Friday, October 28, 2011 - 9:00 am to 5:00 pm
- Hal Bartholomew, Attorney - Beverly Brautigam, CPA
- Divorce, Taxes and Estate Planning
- The Cunningham Room, 4th Floor West Tower Manchester Hyatt Hotel
Online Registration
Hotel Reservations
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Divorce, Taxes and Estate Planning Agenda |
A. THE PROCESS, THE ACCOUNTANT’S ROLE AND FEES
B. PREMARITAL AGREEMENTS, LIABILITY OF SPOUSES, RDPs AND COHABITANTS – CALIFORNIA LAW
C. CALIFORNIA COMMUNITY PROPERTY
D. PROCEDURAL ASPECTS IN CALIFORNIA
E. CHILD SUPPORT
F. CUSTODY AND DEPENDENTS
G. SPOUSAL SUPPORT / ALIMONY
H. PROPERTY SETTLEMENTS
I. THE FAMILY RESIDENCE
J. PARTICULAR PROPERTY RULES
K. FILING STATUS OPTIONS AND RELATED ISSUES
L. CALIFORNIA JUDICIAL COUNCIL FORMS
M.GENERAL
N. QUICK REFERENCE QUIDE
O. PROBLEMS AND ANSWERS
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| A. THE PROCESS, THE ACCOUNTANT’S ROLE AND FEES |
| 1. Alternatives to Litigation |
| a. Collaborative Practice (Divorce) |
| b. Mediation |
| 2. Accountant's Role in Marital Dissolutions |
| a. Forensic |
| b. Non-Forensic |
| 3. Getting Paid |
| 4. Deductibility of Attorney's Fees |
| a. Expenses of Obtaining Divorce, Providing for Children and Dividing Property |
| b. Expenses of Obtaining Alimony |
| b. Expenses of Obtaining Alimony |
| c. Tax Advice |
| 5. Attorney Fee Awards |
| a. Legal Theory for Attorney Fee Award |
| b. Deductibility of Attorney Fee Awards |
| c. Tax Deductibility Letter From Attorney |
| d. Watch Out for AMT |
| B. PREMARITAL AGREEMENTS, LIABILITY OF SPOUSES, RDPs AND COHABITANTS – CALIFORNIA LAW |
| 1. Premarital Agreements |
| a. Uniform Premarital Act - California |
| (1) Statutory Requirements for a Valid Prenuptial Agreement |
| (2) Enforcing A Prenuptial Agreement In California After Marriage of Bonds |
| b. Agreements May Not Promote Dissolution |
| c. Spousal Support Limitations |
| d. Child Support And Custody Limitation |
| e. Effect of Premarital Agreements on Estate Proceedings |
| f. Property Limitation |
| 2. Liability of Spouses |
| a. Responsibility of Community and Quasi-Community Property |
| (1) Community and Quasi-Community Property |
| (2) A Spouse’s Separate Property Is Responsible For: |
| (3) A Spouse’s Separate Property Is NOT Responsible For: |
| (4) Some Tax Cases of Interest |
| (5) Reimbursement Under Family Code § 913 |
| 3. Date of Separation: |
| a. Importance of the Date of Separation |
| b. Factual Issue |
| (1) Conduct of the parties |
| (2) Residing temporarily in different places |
| (3) Filing for dissolution |
| (4) Date the client's attorney instructs the accountant in writing |
| 4. Epstein/Watts/Etc. Reimbursements |
| a. 1987 Reimbursement Statute |
| b. Epstein Credits |
| (1) Epstein Credit Exceptions |
| c. Deductible Expenses |
| d. Watts Credits |
| e. Feldner Credits/Reimbursements |
| f. Sullivan Statute |
| 5. What Income Does Each Spouse/RDP Report When the Ownership Share is Different from the Percent of Proceeds Received? |
| 6. Liability of Cohabitants |
| a. Marvin Actions |
| C. CALIFORNIA COMMUNITY PROPERTY |
| 1. Joint Forms of Holding Property |
| a. Joint Tenancy |
| b. Tenancy in Common |
| c. Tenancy Through Partnership |
| 2. Separate Property |
| 3. Community Property |
| a. Pre-1927 and Post-1927 Community Property |
| b. Post-1974 Community Property |
| 4. Living Trusts |
| 5. Basis: Property Acquired From Decedent |
| 6.Spousal Fiduciary Relationships |
| a. Transfer of Property Between Spouses |
| 7. Management and Control of Marital Property |
| 8. Information Disclosures During Dissolution |
| a. Mandatory Declarations of Disclosure |
| b.Preliminary Declarations of Disclosure |
| c. Final Declarations of Disclosure |
| (1) Contents of Declaration |
| (2) Waiver of Final Declaration of Disclosure |
| (3) Sanctions for Failure to Disclose |
| (4) Grounds for Set Aside of a Judgment |
| 9. Quasi-Community Property |
| 10. Quasi-Marital Property |
| 11. Presumptions |
| 12. Sec. 2640 Reimbursement :Right of Separate-Property Contributions |
| a. Separate-Property Contributions To Community Property |
| b. Separate-Property Contributions to other Spouse’s Separate Property |
| 13. Tracing and Commingling |
| a. Direct Tracing |
| b. Family Expense Tracing |
| 14. Date of Valuation |
| 15. Community Property Earned Income |
| 16. Right to Receive |
| 17. Omitted Asset |
| 18. Joint Estimated Tax Payments |
| a. Notify California Franchise Tax Board in Advance |
| D. PROCEDURAL ASPECTS IN CALIFORNIA |
| 1.Background |
| 2. Grounds |
| a. Irreconcilable Differences |
| b. Incurable Insanity |
| 3. List of States that Recognize Common-Law Marriage |
| 4. Domestic Partners |
| a. Establishing California Registered Domestic Partnerships |
| b. Legal Effect of California Registered Domestic Partnerships |
| c. Terminating a California Registered Domestic Partnership |
| 5. Judgment of Nullity |
| a. Property Division in Nullity |
| b. Tax Consequence of Nullity |
| 6. Residence Requirements |
| 7. Automatic Temporary Restraining Order (ATRO |
| a. Unilateral Severance of joint tenancy |
| 8. Need for Interim Estate Planning |
| 9. Jurisdiction and Venue |
| 10. Judgment |
| 11. Six-Month Waiting Period for Dissolutions |
| 12. Bifurcation |
| 13. Effect of Bankruptcy Judgment |
| 14. Legal Separation |
| 15. Change of Name |
| 16. Nunc Pro Tunc |
| 17. Court File Privacy |
| 18. Joinder of Corporation |
| 19. Joinder Of Employee Benefit Plans |
| 20. Divorce Court’s Orders Do Not Control Tax Consequence |
| E. CHILD SUPPORT |
| 1. Introduction |
| 2. Who is a Parent? |
| 3. Who is a Child? |
| 4. Initiating Support |
| 5. Termination |
| 6. Modification and Revocation |
| a. When A Parent Moves Out of State |
| 7. Impact of New Mate’s Income |
| 8. Military Allowances and Child Support |
| 9. Mandatory Child Support Guidelines |
| a. Findings |
| b. Calculating Net Income |
| c. Disabled Child Support Payorsy |
| d. Deviating From the Guideline Amoun |
| e. Low Income Adjustment to Guideline Support |
| f. Mandatory and Discretionary Add-Ons |
| g. Payment for Uninsured Health Care Costs |
| h. Unallocated Support |
| 10. Security for Support |
| a. Child Support Security Deposit |
| 11. Child Support Obligation and Visitation |
| a. Child Support and Concealment of Children |
| 12. Inexpensive Discovery of Income |
| 13. Challenging Child Support Orders |
| 14. Child Support Piority |
| 15. Enforcement |
| a. Uniform Interstate Family Support Act (UIFSA) |
| b. Penalties for Unpaid Child Support |
| c. Wage Assignments |
| d. Liens |
| e. Nonissuance/Nonrenewal of Professional Licenses |
| f. Nonissuance/Nonrenewal of Driver’s Licenses |
| g. Withholding Unemployment Compensation |
| h. Location of Parents and Assets |
| i. Health Insurance Coverage Assignment |
| 16. Tax Intercept Programs |
| a. Federal Intercept Program (Only Child Support) |
| b. California Intercept Programs |
| 17. Taxation |
| a. Payments Fixed or Treated as Fixed for Child Suppor |
| b. Contingency Relating to a Child of the Payor |
| (1) You Can Have Mention of the Amount of Child Support and Avoid Child Support Treatment |
| c. Reductions Associated with Contingency Relating to Child of the Payor |
| (1) Six-Month Rule |
| (2) Multiple Reduction Rule |
| (3) Rebutting the Presumption |
| (4) Future Modifications |
| (5) Interest Paid On Past-Due Child Support |
| F. CUSTODY AND DEPENDENTS |
| 1. Custody |
| a. Definitions of Custody |
| (1)Joint custody |
| (2) Sole physical custody |
| (3) Joint physical custody |
| (4) Sole legal custody |
| (5) Joint legal custody |
| (6) Statutory Basis |
| b. Visitation |
| (1) Non-Parent Visitation |
| (2) Restrictions on Visitation |
| c. Factors Considered in a Custody/Visitation Award |
| d. Factors Not To Be Considered in a Custody/Visitation Award |
| e. When the Parties Cannot Agree on Issues of Custody or Visitation |
| (1) Mediation |
| f. Section 3111 Evaluation |
| (1) Section 730 Psychological Evaluation |
| (2) OSC/Ex-Parte Hearings |
| g. Custody and Visitation Orders When the Parents are Unmarried |
| h. Stipulations |
| i. Modification |
| j. Attorney for the Child (Minor’s Counsel) |
| k. Conflicting Jurisdiction |
| 2. Dependents |
| a. New Tie-Breaking Rule |
| 3. Dependency Details |
| a. Qualifying Childy |
| b. Qualifying Relative |
| c. Non-custodial parent claiming dependency exemptio |
| 4. Dependency Cases |
| 5. Collateral Consequences of Dependency Exemptions |
| 6. Heads-of-Household |
| 7. Child Tax Credit |
| 8. Dependent-Care Credit |
| 9. Education Credits |
| 10. Earned-Income Credit |
| a. Never-Married Parents |
| 11. Medical Expenses |
| 12. Marital Status of Taxpayer |
| 13. Actual Dependency is Not Always Required |
| a. Medical Insurance and Medical Expensesy |
| b. Dependent Care Credit |
| c. Head of Household |
| d. Earned-Income Credit |
| 14. Written Declarations Releasing the Exemption |
| 15. The Kiddie Tax |
| a. Special Rule Where Parents File Separate Returns |
| 16. Election to Claim Unearned Income of Child on Parent's Return |
| 17. Inspection of Returns |
| 18. Tax Identification Numbers of Dependents Required on Tax Returns |
| 19. Financial Aid |
| G. SPOUSAL SUPPORT / ALIMONY |
| 1. Introduction |
| 2. Temporary/Pendente Lite Support |
| a. County Guidelines |
| b. Rome Review |
| c. Modification of Temporary Suppor |
| 3. Factors in Making Permanent/ Post-Judgment Support Award |
| a. Statutory |
| b. Support to Spouse Convicted of Domestic Violenc |
| 4. Life Insurance, Annuity or Trust for Support |
| 5. Life Insurance Proceeds |
| 6. Vocational Training Counselor |
| 7. Case Law |
| 8. Long-Duration Marriage |
| 9. Termination/Retained Jurisdiction |
| 10. Modification and Revocation of Permanent Support |
| 11. Cohabitation, Bankruptcy, Retirement, Remarriage or Death |
| a. Cohabitation |
| b. Bankruptcy |
| c. Retirement |
| d. Remarriage/Entry into RDP or Death |
| 12. Inexpensive Discovery of Income |
| 13. Enforcement of Spousal Support Judgment |
| 14. Tax Aspects of Spousal Support/Alimony |
| a. Payment is made in cash |
| b. Payment must be received by or on behalf of the obligee spouse |
| (1) Pursuant to divorce or separation instrument |
| (2) Written request, consent or ratification of obligee spouse |
| (3) Cash Payments Involving Property Owned by Obligor Spouse |
| (4) Life Insurance Premiums |
| c. The payments are made under a divorce or separation instrument |
| d. The payments are not designated as not includable in the income of the payee spouse and not deductible by the payor spouse |
| e. Spouses who are divorced or legally separated must not be members of the same household when the payment is made. |
| f. Liability to pay terminates at the death of the payee spouse (substitute payments also not allowed). |
| g. The payor spouse and payee spouse must not file a joint income tax return together for the year in which payment occurred |
| h. Payment must not be considered child support. |
| i. California RDPs |
| 15. Minimum Term Rule Requirement of Divorce |
| a. Separation Instruments Executed After December 31, 1984 and Before January 1, 1987 |
| 16. Retroactive Change in Requirement that Instrument State that Liability to Pay Terminates at Death of the Payee |
| 17. Agreements That Do Not State That Liability to Pay Terminates at Death |
| 18. More on the Requirement for a Divorce or Separation Agreement |
| 19. Unallocated Family Support |
| 20. Other Cases |
| 21. Information to Be Supplied by Payor Spouse |
| 22. Must There Have Been a Marriage? |
| 23. Alimony Audits |
| 24. Alimony Recapture Rule |
| a. Quick Check |
| b. Exceptions to Recapture Rule |
| c. No Other Exceptions |
| d. No Carryover or Carryback of Recapture Deduction |
| e. Alimony Recapture Workshee |
| 25. Election Out |
| 26. Withholding Requirements on Alimony Paid to Nonresident Alien |
| 27. California Residency Issues |
| 28. Old Federal and California Rules |
| a. General |
| b. Child Support Payments |
| c. Lump Sums Payable in Installments |
| 29. Pre-1986 Agreement Modified Post-1986 |
| 30. Alimony as Compensation for IRA Purposes |
| H. PROPERTY SETTLEMENTS |
| 1. IRC § 1041 |
| a. Basis of Transferee Spouse |
| b. Holding Period of Transferee Spouse |
| c. Notice and Recordkeeping Requirements |
| d. Transfers Between Former Spouses |
| (1) Within one year after divorce |
| (2) Related to cessation of marriage |
| (3) Presumption |
| (4) Judgment of Nullity (Annulments) |
| e. Future Transfers |
| f. Transfer of Property to Third Party |
| g. Gifts, Sales, Exchanges |
| h. Generally |
| i. Cash |
| j. Liabilities |
| k. Investment Tax Credit Recapture |
| l. nvestment Tax Credit Carryovers and Capital Loss Carryovers |
| m. Passive Loss Carryovers |
| n. S Corporation Suspended Losses |
| (1) For Years Ending Before January 1, 2005 |
| (2) For Years Beginning After 2004 |
| o. Net Operating Losses |
| p. Installment Sales |
| 2. TRA of 1986 |
| a. Effective Date |
| 3. Gift Tax. Section 2516. Certain Property Settlements |
| 4. California Registered Domestic Partners |
| 5. Section 1041 Does Not Apply to Nonresident Alien Divorced Spouses |
| 6. Non-marital relationship |
| 7. Equal Division |
| 8. Consideration by State Cou |
| 9. The Scope of IRC § 1041 |
| a. Inconsistent Rulings |
| (1) Interest on Series E and EE bonds |
| (2) Military retirement benefits |
| (3) Unstated Interest |
| (4) Stated Interest |
| 10. Deductibility of Interest |
| a. Corporate Redemption |
| 11. Taxation Upon Disposition |
| 12. Notification to The Board of Equalization |
| 13. Property Settlements v. Alimony |
| 14. California Law |
| I. THE FAMILY RESIDENCE |
| 1. Introduction |
| 2. Title Presumptions and Reimbursement |
| 3. Community-Property Contributions to a Separate Residence |
| a. Community Contributions to the Acquisition of Separate Property – California Law |
| b. Moore/Marsden |
| c. Community Contributions to the Improvements to Separate Property - California Law |
| d. Separate Property Contributions to a Community Property Residence - CA Law |
| e. Date of Valuation - All Property – California Law |
| (1) Costs of Sale |
| (2) Tax Consequences |
| f. Deferred Sale of Home Order (The ”Duke” Order) |
| (1) Termination of the "Duke"/Deferred Sale of House Order |
| g. Tax Aspects of Selling the Family Residence |
| (1) IRC § 121 |
| (a) Ownership Test |
| (b) Use Test |
| (c) Sales after December 31, 2008 |
| (d) Married Couples |
| (e) Surviving Spouse |
| (f) California Registered Domestic Partners |
| ( g) Unforeseen Circumstances |
| (h) Equity |
| (i) Five-Year Rule |
| (2) Whose House Is It? |
| h. Related Issues |
| (1) Interest |
| (2) nterest - Second Home |
| (3) Interest Deduction on Marital Home |
| (4) Married Filing Separately. Married Filing Separately |
| (5) Property Taxes |
| (6) Jarvis/Gann Proposition 13 |
| (7) Proposition 60 |
| (8) Rental Agreements and Section 1031 |
| i. Short Sales |
| j. Bankruptcy |
| k. Home Buyer Credit |
| J. PARTICULAR PROPERTY RULES |
| 1. Delayed/Deferred Compensation |
| 2. Terminable Interest Rule Abolished |
| 3. Federal Military Pensions |
| a. FUSFSPA |
| b. TRICARE |
| 4. ERISA (Employee Benefit Plans) |
| a. Qualified Domestic Relations Order (QDRO) |
| b. Taxability of Pensions Under Qualified Plans |
| (1) Non-community property state |
| (2) Community property state |
| 5. If Agreement Doesn't Qualify as a QDRO |
| 6. Sample Language for Spouse’s Rights to Survivor Annuities and QDROs |
| a. Early Distributions |
| b. Excess Distributions |
| 7. Gillmore Election |
| a. John Michael Dunkin v. Commissioner |
| b. Contrast Private Letter Ruling 200442003 |
| 8. ERISA Preemption |
| 9. Individual Retirement Accounts |
| 10. Tax-Deferred Annuity |
| 11. IRC § 457 Plan |
| 12. PERS and STRS – California Law |
| 13. Health Savings Accounts |
| 14. Stock Options |
| a. Taxation |
| 15. Royalties |
| 16. Social Security |
| 17. Severance Pay |
| 18. Vacation Pay |
| 19. Goodwill of a Professional Practice |
| 20. CRUT |
| 21. Term Life Insurance |
| 22. Disability Insurance |
| 23. Health Insurance/COBRA |
| 24. Personal Injury Awards |
| a.Separate Property |
| b. Community Propertyy |
| K. FILING STATUS OPTIONS AND RELATED ISSUES |
| 1. Filing Status Options |
| a. Head of Household (IRC § 2(b)) |
| b. Common-Law Marriage |
| c. Surviving Spouse (IRC § 2(a)) |
| 2. Planning for Your Filing Status |
| 3. Legal Separation |
| 4. Living Apart |
| 5. Marriage Tax |
| a. Roth IRA Conversion |
| b. Cancellation of Debt Income Exclusion |
| c. Capital Losses |
| d. Medical Expenses |
| e. Expensing |
| f. Alternative Minimum Tax |
| g. Aggregate Gross Receipts Limitation |
| h. Social Security Benefits Received |
| i. Casualty or Theft Losses |
| j. Child Tax Credit |
| k. Dependent-Care Credit |
| l. Passive Losses (IRC § 469) |
| m. Individual Retirement Accounts |
| n. Roth IRA |
| o. Interest Deductions |
| p. California surcharge |
| q. Example of Marriage Tax Penalty |
| 6. Foreign Income |
| 7. Joint Returns |
| a. Election to File Joint Return |
| b. Tax Effects of California Registered Domestic Partners |
| c. Federal Law Denies Joint Filing for Legally Married Same-Sex Couples |
| d. Filing Status in California |
| e.Does The Court Have Jurisdiction To Order A Spouse To Sign A Joint Return? |
| f. Taxpayer can File Joint Return After IRS Prepares Substitute Return Using Married-Separate Rates |
| g. Joint Returns Need to be Amended After Judgment of Nullity |
| h. May One Person Sign a Joint Return? |
| i. Amending a Joint Return with Only One Signature |
| j. Ex-spouse Can Share in NOL Carryback to Joint Return |
| 8. Extension – Not an Election of Filing Status |
| 9. Address |
| a. Last Known Address Rule for Mailing Deficiency Notices |
| b. Change of Address Formy |
| 10. Penalties and Interest |
| a. Penalty for Late Filing |
| b. Penalty for Late Payment |
| 11. Statute of Limitations (Assessment Period) |
| 12. Married Taxpayers Filing Separately |
| a. Allocation of Withholding, Overpayment or Estimated Tax Payments |
| b. FTB Follows Court Order |
| c. Spouses Living Apart/Requirements for Separate Property Treatmen |
| d. IRC § 66 and California Law |
| 13. Relief From Joint and Several Liability |
| a. Innocent Spouse Rules |
| b. Separation of Liability |
| c. Equitable Relief |
| d. Domestic Violence |
| e. Innocent Spouse Cases |
| f. California Law |
| g. Trial Judge has Obligation to Report to the IRS |
| 14. Self-Employment Tax |
| 15. Estimated Tax |
| 16. Date of Separation |
| L. CALIFORNIA JUDICIAL COUNCIL FORMS |
| 1. Petition (Form FL-100) |
| 2. Appearance, Stipulation and Waivers (Form FL-130) |
| 3. Summons (Form FL-110) and Restraining Order Attachment |
| 4. Income and Expense Declaration (Form FL-150) |
| 5. Judgment (Form FL-180) |
| 6. Notice of Entry of Judgment (Form FL-190) |
7. Request for Production of Income and Expense Declaration (Form
FL-396) |
| M. GENERAL |
| 1. IRC §1041 and Regs |
| 2. IRC § 1.6015(b)-1 |
| 3. Form 8332, Release of Claim to Exemption for Child of Divorced or Separated Parents |
| 4. Form 8822, Change of Address |
| 5. FTB 3533, Change of Address |
| 6. Form 4506, Request for Copy or Transcript of Tax Form |
| 7. FTB 3516, Request for Copy of Personal Income Tax or Fiduciary Return |
| 8. FTB 3516, Request for Copy of Corporation, Exempt, Organization,Partnership or Limited Liability Company Return |
| 9. Form 8082, Notice of Inconsistent Treatment or Administrative Adjustment Request (AAR) |
| 10. Form 8857, Request for Innocent Spouse Relief |
| 11. Innocent Spouse Relief Chart |
| 12. Marital Dissolution Client Information Sheet |
| 13. Alimony Recapture |
| 14. Individual Consent to Release Information |
| 15. Entity Consent to Release Information |
| 16. Improvements Which Add to Basis |
| 17. Sample Letter for Apportionment of Taxes |
| 18. Sample Tax Deductibility Letter from Attorney |
| 19. AGI Phaseout Levels for Tax Breaks |
| N. QUICK REFERENCE QUIDE |
| O. PROBLEMS AND ANSWERS |
| a. Property Division in Nullity |
| a. Property Division in Nullity |
| a. Property Division in Nullity |
| a. Property Division in Nullity |
| a. Property Division in Nullity |
| a. Property Division in Nullity |
| a. Property Division in Nullity |
