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Hello all,
Thank you in advance for your great advices.
There was a divorce and the judge ordered in 2019 to pay 400k to spouse based on the business income generated. The money was paid only in 2020. I know that the tax law has changed post 2018 but is there any way that the issuer can deduct that? I know that if we are talking about lump sum property payments then those payments can still be deducted; what form should be issued to the receiver of the payments?
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Just-Lisa-Now-
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♪♫•*¨*•.¸¸♥Lisa♥¸¸.•*¨*•♫♪
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The deductible portion of a property settlement is equal to zero.
Slava Ukraini!
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It was alimony. She made very good money while he didn't make any. Initially she mentioned about a property that they had together but just now she said that the money paid were for alimony not property lump sum.
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Get the property settlement and divorce agreements and read them. Based on what you describe this is not alimony. Even it was, alimony for a post 2018 divorce is not deductible either.
The more I know the more I don’t know.
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Thank you. I already asked for those divorce documents and I am waiting on them. I thought that I will be proactive and see if there was a way in deducting any of those payments made.
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"She made very good money while he didn't make any."
You gave a vague inclusion of "business." Can you be more specific and put that in perspective? Did he buy her out of an S Corp, for instance?
Don't yell at us; we're volunteers
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No, it was not a buy out. That's exactly what she told me that she made good money while he didn't. He was not included on any of her businesses (S-Corps and Schedule Cs). He wanted a lump sum of money (400k in this case), so she can keep all her businesses and whatever else she had.
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= Property Settlement
= Nondeductible.
The more I know the more I don’t know.
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That’s correct. This is why I reached out to the community because you always give fantastic answers/solutions.
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<<He was not included on any of her businesses (S-Corps and Schedule Cs). He wanted a lump sum of money (400k in this case), so she can keep all her businesses and whatever else she had.>>
This is settlement language, not alimony language. Alimony language would be to give income, not assets.
He wanted to be bought out from her ownership, not from her income.
Besides, it's post 2018, so it doesn't matter. Alimony isn't deductible any more.
