July 30, 2019 at 10:51 am #31375JamesBlocked
I seem to have a spate of weird cases recently. I guess I am just lucky. In this particular case, I have done a preliminary investigation of a taxpayers situation. She is liable for over $200k in income taxes related to a former S-corp she “owned” 50/50 with her ex-husband.
The liability issue is very contentious. She seems to think she shouldn’t be held liable as she had no input in filing the return and she didn’t get any money. Honestly, I think her recollection of events are very skewed and this is probably not a great fight to have with the IRS. I have a corporate agreement saying she is 50% shareholder and checks paid out of the corporate account with her signature (for both business expenses and transfers to personal accounts). I don’t see it but if anyone thinks this may be something worth pursuing I’d love to hear it.
The more pressing issue is that she has a home that was formerly held 50/50 with her ex (no mortgage, FMV $300k). It was transferred to her during the divorce 100% but I see a federal tax lien on her ex-husband before the transfer. I am going to assume that the lien still exists on his former 50% share of the home. This house puts a real dent in an offer. If the house is treated as 100% hers and not reduced by the 50% lien than she can full pay the tax debt. I am hoping that if she counts only 50% that we can look at showing it would be impossible to get a loan under these circumstances and a hardship (she has limited income and lives with her minor son who will graduate in three years).
Finally, the client has two possible lawsuits. One against her former divorce attorney and for a car crash. She has no idea of value and neither has been filed in court or a demand letter sent. I would assume these lawsuits are a potential asset but I can find no guidance on how to list these and at what value. Lawsuits are always speculative and it could be she gets something after years of litigation. Again, thoughts are much appreciated!
Long winded I know but I can’t find any treatise or book that covers weird situations like these.
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