A divorce may have a variety of impacts on a business owner. This is partially because a company may represent an Ohio resident’s biggest asset and primary source of income. During divorce settlement talks, how to divide assets and determine how much a person makes are often major points of contention. In some cases, it can be hard to differentiate between personal and corporate assets because of the company’s size and ownership structure.
The Tax Cuts and Jobs Act allows a business owner to label some income as a return on investment as opposed to wages. This could make a business more valuable while reducing the amount used to calculate spousal and child support payments. An independent appraiser may be able to determine how much a company is worth as well as create a breakdown of its expenses. However, any documents that he or she uses to come to a conclusion should be kept confidential.
When structuring a settlement, it is important for all parties to be aware of potential tax consequences. For instance, if a spouse receives an asset that was first owned by the company, the government may recapture any deductions previously taken on that item. In some cases, this may be done even if the party responsible for paying back taxes is not given any assets to offset the loss.
The end of a marriage may result in spending time and money deciding who is entitled to a business or other marital assets. Individuals may be able to protect themselves through the use of a prenuptial or similar agreement. It may stipulate what happens to the business in the event of a divorce. This may make the process of ending a marriage less stressful and allow for a timely settlement.