Generally, people in Florida have an understanding that if you get divorced, there is a premise that the marital assets and liabilities will be distributed equally unless there is a valid basis for an unequal distribution.
However, a common question is:
What is my equal value of a business that was formed by only one spouse during the marriage?
If only one spouse is involved in the business, the other spouse likely thinks that the business is worth a lot more than it really is. And the spouse that is involved in the business is most likely proud of its financial stability any other day, but come time for divorce, all of a sudden it’s a business that is worth nothing.
Below are four common factors to consider that may help in calculating your business valuation or come into play during your divorce proceedings:
Picture this… You’re about to sell your house and retire to Florida. The documents are signed, movers are hired, and all you need to do now is confirm that the title company’s wire has hit your account. You receive a call from the closer that the funds have been wired. You check your account—no wire.
An hour goes by, then two, then twenty-four hours, then two days. When you ask the title company to confirm the wire instruction from “your” email, you discover to your horror that the wire instructions “you” sent were not from you, but from a hacker who got into your email, found out you were selling your house, and sent fake instructions to the title company.
This has happened before and will almost certainly happen again. But it doesn’t have to if you are diligent and careful.
The commercial real estate market breathed a sigh of relief when President Trump’s new tax bill, Public Law 115-97, preserved the use of 1031 transactions for commercial real estate properties.
Let’s review what a 1031 Like-Kind Exchange is defined by the IRS:
Whenever you sell business or investment property and you have a gain, you generally have to pay tax on the gain at the time of sale. IRC Section 1031 provides an exception and allows you to postpone paying tax on the gain if you reinvest the proceeds in similar property as part of a qualifying like-kind exchange. Gain deferred in a like-kind exchange under IRC Section 1031 is tax-deferred, but it is not tax-free.
With the domestic commercial real estate market thriving, income-producing real properties are being exchanged again with increasing popularity. Congress did not allow the continuation of 1031 exchanges for personal property, such as vehicles, jewels, and stocks, but the capital gains tax will continue to be deferred when parties exchange like properties—as long as the strict 1031 rules are met.
As a result, in this increasingly active real estate market, we are witnessing a revival of 1031 exchange transactions at our firm.
There has been a lot of talk recently about the Tax Reform Act that was passed by the Federal government and primarily deals with income tax. However, there has also been recent activity with a different type of taxes, real property taxes. In December of 2017 the Fourth District Court of Appeal in Florida issued an opinion in the case of Jenifer E. Calendar v. Stonebridge Gardens Section III Condominium Association that dealt with the distribution of surplus funds from a tax sale of an owner’s condominium unit.
Owners of real property have an obligation to pay their property taxes each year. If they do not, the Tax Collector holds an auction for a tax certificate sale to pay off the delinquent taxes. The successful bidder at the auction is issued a tax lien certificate. This entitles the holder of the certificate a lien on the property and interest on the lien. If the tax lien certificate and accrued interest is not paid off within two years, the holder of the certificate may force a public auction of the property. This is called a tax deed sale. At the tax deed sale, the winning bidder purchases the property. The tax lien certificate holder is paid, and any remaining lienholders and the prior property owner may apply for any excess funds. Continue reading →
The most significant change to the U.S. tax code in 30 years was approved by Congress and signed by the President just in time for Christmas 2017. Many of the provisions became effective January 1, 2018, only a few days after being enacted.
SO, WHAT DOES IT CHANGE?
Corporate and Pass Through Entity Income Tax: Permanent
Corporate Tax Rates are reduced from 35% to 21%.
Business Income from Pass Through Entities: provides for a 20% deduction for individuals and trust and estates on domestic qualified business income from pass-through entities.
Effectively reduces the top tax rate for those eligible to 29.6% (from 37%)
Wages paid to owners and certain income from specified services business (i.e. attorney and accounting firms) are excluded from the deduction.