Is Tax Relevant to a Divorce Case?
Tax issues cannot be ignored. Often tax issues are not identified until it is too late to avoid the consequences, manage them or structure around them. Tax is yet another area of sophistication that must be addressed in a divorce. Tax plays a role in many, if not most, divorce cases. Divorces involve income and assets that frequently have tax related issues.
Tax issues may impact the actual values of many asset categories and they may impact decisions relative to whether an asset is desirable to a party. The tax issues related to the following issues and assets should be analyzed early in the divorce.
Tax rules and regulations must be strictly adhered to in order to avoid additional tax, penalties and interest. The Internal Revenue Code (IRC) is somewhat like a minefield in enemy territory with the distinction being that the IRC provides a map detailing the exact location of the explosives. Unless you are familiar with the IRC and its traps you run the risk of unexpected and costly surprises.