In addition, vacation and other personal expenses may be paid by the business and charged off as business travel. The managing spouse may have the company purchase and maintain cars, boats, and other assets for the family s personal use. All of these items represent additional compensation to the family and should be considered in estimating total disposable income for alimony and child support purposes. To properly value the business, business income also may need to be adjusted for excess compensation as a result of those items. The managing spouse may receive income from the business that is hidden from the other spouse.
Many businesses handle large amounts of cash income.
A managing spouse may periodically use this cash personally and not declare the income to the Internal Revenue Service or to his spouse. The managing spouse may also be able to defer the timing of income recognition until after a divorce is final. Hidden or deferred income represents additional disposable income that should be available for the support of the family. The managing spouse may provide incorrect or incomplete information to the opposing spouse s valuation consultant, making it virtually impossible for that consultant to accurately estimate the value of the company. Our experience in taxation, attest engagements and financial analysis uniquely qualify us to provide expert witness testimony in divorce proceedings.