Sunday, September 18, 2005
Case Law Development: Pass-through income in an S corporation is not ordinarily income in divorce action
How should an individual’s interest in a small business corporation be characterized in a divorce action if the corporation elects to operate as an S corporation, so that all the corporation's income "passes-through" to the individual owners for tax purposes? The question has produced divergent answers among the Florida court of appeals districts. Some districts had adopted a bright line rule that automatically treats undistributed business income as income attributable to a spouse. In this case, the 4th District Court of Appeals chooses the alternative approach that does not characterize undistributed “pass-through” income as income in divorce unless there is proof that the undistributed income was retained for non-corporate purposes. In a clear and carefully written opinion, the court describes the nature of S corporation income, interprets Florida statutes defining income for alimony and child support purposes in light of other Florida states regarding the right of corporations to distribute income to shareholders, and reflects on the effect of a bright-line rule rather than a individualized determination.
Zold v. Zold, 2005 Fla. App. LEXIS 14467 (4th Dist. September 15, 2005)
Available on the web at www.5dca.org/Opinions/Opin2004/062104/5D03-148.op.pdf (last visited September 17, 2005 bgf)
In interpreting a prenuptial contract, the Indiana Court of Appeals addressed several novel issues including:
- the meaning of the term “estrangement” which was used in the contract as the event at which certain property should be valued (the court find estrangement occurs at, the latest, upon one party’s filing for divorce)
- the enforceability of an agreement in the contract requiring that the couple file joint tax returns if that reduced overall tax liability(the court found no error in the trial court’s requiring Wife to reimburse Husband for excess taxes paid due to her filing separate returns)
- the characterization of a tax loss carryover as marital property subject to distribution (the court joined Missouri and New York in concluding that tax loss carryovers can be considered marital property)
Magee v. Magee, 2005 Ind. App. LEXIS 1678 (September 12, 2005)
Available on the web at http://www.in.gov/judiciary/opinions/pdf/09120501ewn.pdf (last visited September 17, 2005 bgf)
Case Law Development: Defendant Convicted of Destroying Property “of Another” even though he owned a Marital Interest in the Vandalized Property
A Missouri criminal defendant failed in his attempt to use the concept of marital property to exempt him from liability for a crime against his wife. The Court of Appeals of Missouri upheld the conviction of Husband for criminal property damage, for vandalizing a motor vehicle titled in the name of his wife. Husband claimed that an essential element of the offense required that the defendant have damaged property "of another." He argued that, because he had a marital interest in the motor vehicle he was charged with damaging, he could not be found guilty of the offense. The court disagreed, citing cases from several other jurisdictions interpreting “property of another” in similar circumstances.
State v. Brushwood, 2005 Mo. App. LEXIS 1319 (September 13, 2005) Available on the web at http://www.osca.state.mo.us/courts/pubopinions.nsf/0/fb9c7914e49100208625707a00646649?OpenDocument (Last visited September 17, 2005 bgf)
Separating frequent-flier miles in a divorce is a serious and increasingly common issue. One big hurdle: Airlines do not allow customers to transfer frequent-flier miles, even in a divorce. Moreover, placing a value on frequent-flier accounts can be tricky. "Now that people generally accept the idea that they're property, people are more willing to divide them up or trade them for something else," says Tate Sterrett, a Charlotte, N.C., lawyer who specializes in family law.. . . In one of the few cases on the matter, a Minnesota court in 1999 determined that the miles are worth 2 cents per mile. The case is not binding in other states, but lawyers typically use that figure as a guidepost. For someone with 25,000 miles, which generally is enough for a free round-trip domestic ticket, that's about $500. By Tony Mecia, The Charlotte Observer, Sun-Sentinal.com.
http://www.sun-sentinel.com/travel/print/sfl-divorcemilessep18,0,2550558.story?coll=sfla-travel-print (last visited September 18, 2005 , REO).
ZIMBABWE’S battle against Aids, which has so far claimed more than two million lives, received a major boost on Friday when more than 70 Apostolic and Zionist churches made a landmark resolution to abolish polygamy at the launch of an anti-HIV and Aids blueprint in the capital. Polygamy has been found to fuel the spread of HIV and Aids and is a deep-rooted practice in the sects. The 23-page policy document supports this landmark development with Scriptures from the Bible, and the abolition of polygamy will start with the leaders of the Apostolic and Zionist churches. By Sarah Tikiwa, The Sunday Mail, zimbabwemail.com.
http://www.zimbabwemail.com/index.php?id=12590&pubdate=2005-09-18 (last visited September 18, 2005 , REO).
PHNOM PENH. Cambodia's National Assembly approved unanimously on Friday a draft law on domestic violence aimed at protecting victims of domestic violence and preventing domestic violence. The draft law, initiated by the Ministry of Women's Affairs, was debated for three days and approved by 88 lawmakers at Friday's session. Lawmakers and activists welcomed the law, saying that the law will serve as an effective tool to help curb family violence in Cambodia. By: news.xinhuanet.com.
http://news.xinhuanet.com/english/2005-09/16/content_3499848.htm (last visited September 18, 2005, REO).
NEW DELHI, India. President APJ Abdul Kalam Friday gave his assent to the Protection of Women from Domestic Violence Act, 2005. The Act aims to provide more effective protection to women who are victims of violence of any kind within the family and for matters connected therewith or incidental thereto. The Act will be applicable to all states and UTs except J&K. By: Thestatesman.net.
http://www.thestatesman.net/page.news.php?clid=2&theme=&usrsess=1&id=90086 (last visited September 18, 2005, REO).