New York Divorce Law...

New York Law - May the Court Consider Tax Issues.

The court may consider tax issues both in setting spousal maintenance and in dividing the property.

It must be fairly clear that the tax consequence will actually be incurred. The court will not consider the effects of merely speculative transactions.

The tax issues that arise most frequently are:

• Tax that would be paid if securities or mutual funds were sold.
• Tax that would be paid if the family home were sold.
• The deductibility of spousal maintenance to the payer and inclusion in income of the recipient.
• The non-deductibility of child support and non-inclusion in income of the recipient.
• The income tax exemption for a child, which sometimes may be given to either parent.

Section 236. B.5.c.

Cases:

Hartog (1995) 623 NYS2d 537 (The husband was planning to sell his interest in a business and distribute the proceeds to his wife. The court took into account the fact that husband would have to pay capital gain income taxes on the sale, and reduced the wife's distributive share accordingly.)

Chase (1994) 618 NYS2d 94 (tax considerations taken into account).

De La Torre (1992) 583 NYS2d 479 (The husband cashed in his pension early in order to pay the wife her share upon the divorce. He had to pay a tax of 34% when he did so. The court concluded that the pension amount must be reduced by 34% -- 28% for federal taxes and 6% for New York State taxes, before applying the wife's percent to get the amount to distribute. The husband, a tax accountant, had testified to the tax effects on his own behalf.)

Schanback (1990) 552 NYS2d 370 (The husband brought tax issues up on appeal that he had failed to raise in the initial trial. The appeals court declined to consider them, saying that the husband had to raise them in his initial trial. Additionally, the court found the points the husband raised to be unreliable and misleading.)

Maloney (1988) 524 NYS2d 758 (party must do tax calculation and present result to court).

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