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Marriage along with Business Don't Mix

Why Spouses Make Lousy Business Partners
By Stephen J. Dunn, Forbes.comToday
Last month I wrote a column for Forbes about the tax reasons of which spouses make lousy business partners. First, business-related tax problems could threaten both spouses’ assets along with credit if they’re partners. Second, if the marriage sours, one spouse might call inside Internal Revenue Service to investigate the some other.

right now, through my own practice comes a case of which makes my point. Ron, a longtime client, has given me permission to tell his story, provided he’s not identified, as a warning to others. Ron called a few months ago. He said of which he had found some correspondence indicating of which his wife was having an affair. inside correspondence Ron’s wife said of which she was going to leave Ron in June of This kind of year. In June they might have been married several years, along with she might have, at of which point, been entitled to a share of Ron’s property under their prenuptial agreement. (She can be Ron’s second wife.)

At about the same time Ron began noting of which key financial documentation of his business was missing. A flash drive containing sales along with cash receipts data was missing. Ron’s wife worked as the bookkeeper of his business. I asked Ron whether he had been reporting all of his business income on his tax returns. Ron said of which he had not reported some income of which he had been paid in cash.

I told Ron of which the idea was a scenario I had seen all too many times inside past. She was going to divorce him along with use his tax exposure to leverage a better financial settlement for herself inside divorce, along with possibly report Ron to the IRS Criminal Investigation Division.

I advised Ron to see a divorce attorney. Ron was reluctant. He wondered if the facts actually meant what they so clearly did mean (to all the entire world except Ron). He talked about reconciling with his wife.

I also advised Ron to do a voluntary disclosure with the IRS. This kind of was an agonizing decision for Ron, as the idea might cost him dearly in additional tax along with interest, along with possibly penalties, as well as legal along with accounting fees. however the idea might prevent Ron through being prosecuted for having failed to report some of his income.

Ron followed my advice. His divorce can be nearly final. The IRS notified Ron two weeks ago of which his voluntary disclosure had been accepted, meaning he isn’t at risk of being prosecuted.

Last week a divorce attorney representing Ron’s wife called Ron’s divorce attorney along with, not surprisingly, mentioned the income of which had been omitted through Ron’s tax returns.

Yesterday Ron received a text message through his soon-to-be ex-wife. inside message she acknowledged of which she might not receive any of Ron’s property because he “had all of his ducks lined up.” She specifically mentioned Ron’s voluntary disclosure to the IRS. Neither Ron, his divorce attorney nor I had mentioned the voluntary disclosure to Ron’s wife or to her attorney. How do you suppose she learned of the idea? can be the idea possible she herself had gone to the IRS in search of an informant’s reward? (For more on IRS along with informants, click here.)

Stephen J. Dunn can be a tax attorney in Birmingham, Mich., adjunct lecturer inside University of Michigan-Dearborn College of Business along with author. Write to him at steve@demolaw.com.

Marriage along with Business Don't Mix

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Nm Husband Wife 100618 Me.jpg

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